London oil prices rise at prospect of OPEC pact with other key producers

By the OGJ Online Staff

LONDON, Oct. 29 -- Prices on the London International Petroleum Exchange moved up Monday, responding to suggestions that the Organization of Petroleum Exporting Countries and key non-OPEC producers will agree on controlling world output this winter.

Prices for November deliveries of the benchmark Brent crude rose 48¢ to $21.50/bbl. But the average price for OPEC's basket of seven crudes fell to $18.97/bbl, well below the $25.56/bbl that it commanded the day before the Sept. 11 terrorist attacks in the US.

OPEC members have suggested reducing quotas 700,000 to 1.5 million b/d to send prices back to the mid-point of its targeted $22-$28/bbl price range.

The 10 members of OPEC with current production quotas, excluding Iraq, agreed to reduce output by a total 3.5 million b/d, or 13 %, on three separate occasions earlier this year. But the organization is seeking support of non-member producers for the next reduction.

It was suggested that no official information would be released from Monday's meeting of OPEC technicians with their peers from seven non-member producing countries in Vienna. Instead, the discussion between the two groups would be debated at the regular meeting of OPEC ministers Nov.14.

However, the scope for the non-member producers to reduce output is limited. Russia has said that, if anything, its production will have to rise to meet internal demand this winter, although it may consider curbing exports. Mexico said its economic needs rule out a production cut.

Norway has said its production is an internal matter. Falling income from oil sales announced Monday by Statoil AS will maintain pressure on Norway to leave production unchanged.

The only non-member to confirm it would go along with OPEC in cutting production is Oman, which exports 800,000 b/d.