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To: A. Fineigler who wrote (39824)	3/13/1999 8:11:00 AM
From: Captain James T. Kirk	Read Replies (2) \| Respond to of 95453

March 12, 4:48pm Oil Chiefs Agree To Cut Production By MIKE CORDER AMSTERDAM, Netherlands (AP) -- Major oil-producing nations pledged Friday to slash production in an effort to relieve the worldwide glut of oil that has depressed prices for months. OPEC members, except Iraq, reached agreement with two non-OPEC exporters to reduce overall production by 2 million barrels a day. The news sent crude oil prices to five-month highs on commodity markets, before dropping back slightly on profit-taking. After years of seeing OPEC promise cuts only to cheat on quotas, traders are optimistic that these cuts may stick because producing countries can't afford to let prices fall further. But some analysts remained wary that members of the dysfunctional OPEC family may renege on the pledge in fear of losing oil income. ''We'll need to see it to believe it,'' said economist Peter van Doesberg with Dutch brokerage Stroeve. ''It's not guaranteed that other countries will stick to the agreement. It's a fragile cartel.'' OPEC members Saudi Arabia, Iran, Algeria and Venezuela, together with nonmember Mexico, thrashed out the production-cut agreement during two days of meetings in the Netherlands. The deal must be formally approved at a March 23 meeting of the Organization of the Petroleum Exporting Countries in Vienna. Saudi Oil Minister Ali Naimi said non-OPEC members Mexico and Oman have also committed to the cuts, and discussions are under way with other non-OPEC countries. The cuts, effective April 1, amount to 2 million barrels a day and would be added to existing OPEC and non-OPEC cuts of 3.1 million barrels a day agreed upon last June, he said. ''Any higher than this and I think it would have got into the range of implausible. This is about the maximum people can stomach,'' said analyst Janelle Matharoo of Bankers Trust in London. Algerian Oil Minister Youcef Yousfi, who is also OPEC president, said a more precise figure and a breakdown of the cuts would be given at the March 23 meeting. Kate Warne, an analyst with the investment firm Edward Jones in St. Louis, said OPEC members are still exceeding their self-imposed production quotas by 1 million to 1.5 million barrels per day. So if there is no cheating on this agreement, it would make headway in reducing the glut, she said. Oil prices have been rising in recent days as traders grew optimistic that some cutbacks would be announced before the OPEC meeting. Friday's announcement pushed up contracts for April delivery of light, sweet crude 18 cents to close at $14.49 a barrel on the New York Mercantile Exchange, after hitting an intraday high of $15.11 -- the highest since early October. The rally has pushed oil prices up 35 percent from December's 12-year lows. In London, North Sea Brent Blend crude oil rose 42 cents to $12.60 per barrel at the International Petroleum Exchange, after hitting an intraday high of $13.19. Brent crude last settled above $13 per barrel in November Analysts estimated that crude prices could rise to $16 to $20 per barrel by year's end if oil producers adhere to the cutbacks. James Van Alen, an analyst with Janney Montgomery Scott Inc. in Philadelphia, said the market is more willing to believe that the cuts will stick because producers have been suffering so long from depressed prices. ''What you're seeing is that they're a little more scared,'' Van Alen said. Also raising optimism was a pledge last month by the president of Venezuela -- seen as one of the largest overproducers -- to comply with the previously announced cutbacks. One of the major obstacles to a new agreement had been the issue of Iran's production. Iran has insisted that any cuts be made from a base production level of 3.925 million barrels a day, while other oil producers claim that figure should actually be 3.623 million barrels a day. The oil ministers declined comment Friday on the issue, but consultations between Saudi Arabia and Iran and also between Gulf Cooperation Council members appear to have broken the stalemate. OPEC members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. ------ EDITOR'S NOTE: AP Business Writer Eric R. Quinones contributed to this report from New York.