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Oil producers to up output
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March 2, 2000: 8:23 a.m. ET
Move could ease global oil prices; details are expected to follow at OPEC meeting
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LONDON (CNNfn) - U.S. oil prices hurtled to just below $32 a barrel on Thursday despite news that Saudi Arabia, Venezuela and Mexico backed an increase in crude oil production, on worries that it could take weeks for any extra oil to get to the market.
The New York light sweet crude oil contract for April delivery inched up 12 cents to $31.89 per barrel on the New York Mercantile Exchange, in late afternoon trading on Thursday. The price of Brent crude oil from the North Sea closed in London up 45 cents to $29.15 a barrel.
Oil prices are at their highest levels since the outbreak of the Persian Gulf war nine years ago, affecting the cost of heating oil, diesel fuel and, more recently, gasoline.
"Uppermost in our minds is to maintain stability in the markets," Saudi Oil Minister Ali Naimi said after a meeting in London. "There is need for additional production. The issue is when and how much."
The ministers refused to say what price they anticipated for crude oil.
The White House Thursday welcomed statements from oil-producing nations that they recognize the need to increase in oil production and stabilize prices.
"I think it is important that the major oil-producing countries have indicated that they believe the volatility is harmful and that they want to return to a more stable price," White House spokesman Joe Lockhart said.
Lockhart said President Clinton planned an afternoon meeting with members of Congress concerning high home heating oil prices in the Northeast.
On Wednesday, Energy Secretary Bill Richardson, who had just returned from a week-long trip to top oil-producing nations, faced tough questioning on Capitol Hill about the administration's response to the crisis.
But he said he was led to believe that the Organization of Petroleum Exporting Countries would adopt a "substantial" increase in production.
"[Producing nations'] upcoming decisions on production levels will not be arbitrary. They will take into account the implications of current production levels on the world economy," Richardson said in prepared comments to the House International Relations Committee.
Mexico stays in producer camp for now
Luis Tellez, oil minister for non-OPEC Mexico and a key ally of OPEC's in curbing output, declined to allay fears among producing countries that Mexico might go its own way and lift output independently if the cartel delays.
"That we will have to see. There is a consensus to be built and we will have to wait for that consensus," he said. "There is nothing completely ruled out."
Tellez consistently has said his country sees the need for extra oil to be produced beginning in April, and insiders say Saudi Arabia supports that position.
But OPEC price hawks, led by Iran, still must be convinced that extra oil will not send prices plunging again.
Scarred by the memory of oil's price crash in 1998, Tehran does not want to risk raising output during the second quarter when demand goes into a seasonal dip.
"They're scared to death," said one official on Thursday "They don't want to risk destroying revenues."
The development follows criticism of producing nations by the United States and other countries over output cuts in 1999 that have more than tripled oil prices.
The world consumes about 77 million barrels of oil a day, but production has fallen to 75 million barrels a day. The tight supply has forced oil companies to draw on inventories that have fallen to dangerously low levels.
OPEC accounts for about 30 percent of total worldwide oil production. 
-- with contributions from The Associated Press and Reuters
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