Likely OPEC Cutback Helps Push Oil Prices Up
Oil prices are beginning to recover from low levels that produced inflation relief and record-low pump prices, and so are oil industry stock prices, which contributed to the run-up in the Dow Jones industrial average yesterday.</br></br>The rally, which has pushed crude oil prices up 33 percent from a 12-year low of $10.72 in December, resulted from different developments, according to oil industry experts. The prospect of further cuts in production when the Organization of Petroleum Exporting Companies meets on March 23, a reduction in inventories and heavy demand for heating oil in Germany in advance of an increase in tariffs have all fed the trend.</br></br>Yesterday the rally stalled and prices fell slightly, with April crude oil futures on the New York Mercantile Exchange dropping 38 cents to $14.31 a barrel. But many analysts continue to believe that the signs point to a production cutback by OPEC nations, which were meeting in preliminary sessions yesterday and today in Amsterdam.</br></br>In the past, many oil-producing nations doubted Saudi Arabia's commitment to reducing production, several analysts said. But meetings over the past 10 days between Saudi Arabia and Iran have begun to remove those doubts, said Roger Diwan, director of global oil markets for the D.C.-based Petroleum Finance Corp.</br></br>But industry analyst Constantine Fliakos of Merrill Lynch & Co. said that Venezuela, which also is a member of OPEC, is under pressure from its unions to maintain production at current levels, which might threaten an agreement.