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Andrew Mitchell
London, Oct 6: Oil prices retreated on Monday as a summit between key producers Saudi Arabia, Venezuela and Mexico dampened prospects of further output cuts.
International benchmark Brent futures for November closed 29 cents down at $14.07 a barrel at 1915 GMT having fallen to about $13.90 earlier in the day, a yawning gap of some six dollars below last October's average. The producer trio said after a meeting in Cancun, Mexico, that they would push to extend three million barrels per day (bpd) of supply sacrifices that they have already engineered this year.
But they stuck by their pre-meeting signals that they would not announce further cuts. Saudi Arabian oil minister Ali al-Naimi later leaned against more oil output cuts, emphasising that compliance with current reductions was the key.
"We have to maintain this (production cut) discipline and watch the market, because continuous production cuts are not the solution," Naimi told the Saudi newspaper al-Riyadh.
He said he feared any further cuts bymembers of the Organisation of Petroleum Exporting Countries (Opec) would only "encourage countries that are not committed to the cuts to persist in their non-abidance."
Naimi and his Venezuelan counterpart Erwin Arrieta did say they would press Opec to extend its 2.6 million bpd cutbacks by six months, to the end of 1999.
Luis Tellez, oil minister of non-Opec Mexico said his country would extend its 200,000 bpd export cut by six months to the middle of next year.
The cuts have helped oil prices recover from summer lows near $11.50 as a big stock surplus is gradually whittled away.
But demand is under threat from the world's tottering economy, and analysts Express particular concern for price prospects in the second quarter of next year, as winter consumption wanes.
Naimi said Opec had two goals -- maintaining oil prices at a reasonable level of between $15 and $20 a barrel and extending their market share.
"We have to increase our share in the oil market and not to leave the market open for otherproducers... As a group we can raise our income by increasing our share in the market," he said.
Opec secretary-general Rilwanu Lukman said the group's next ministerial meeting in late November would discuss the producer trio's call to prolong production cuts.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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