Oil prices inch up after oil ministers meet

Oil prices inch up after oil ministers meet

TOKYO (Reuters): Crude oil prices edged higher in early Asian
trade on Monday after ministers from three key oil-producing
nations on Saturday reiterated their commitment to maintaining
oil production cuts until March 2000.

But any bullish implications of the supply cut agreement were
at least partially offset by a Venezuelan proposal on price
targeting that hinted oil producers think prices have risen far
enough.

The New York Mercantile Exchange's October crude oil futures
had last traded at US$21.31 per barrel as of 0100 GMT on Monday
on the ACCESS electronic after-hours trading system, up four
cents from Friday's settlement in New York. The benchmark
contract had traded between $21.24 and $21.35.

On Friday, the October crude futures settled 32 cents higher
at $21.27 as players closed out short positions ahead of the
weekend.

Oil ministers from Saudi Arabia, Venezuela and non-OPEC Mexico
met in Caracas on Saturday to assess the world market and to
discuss price and inventory levels.

In a joint statement after the meeting, the ministers said
that, "The stability and sustainability of oil prices requires
that the production cuts be kept in place until the end of March
2000."

While the declaration was supportive for crude oil prices,
market participants were unsure how to react to a proposal by
Venezuela for an automatic mechanism to manage oil supply so as
to keep prices within a specified range.

"People didn't know what to make of it (the outcome of the
Caracas meeting)," said a New York-based broker.

Traders said the band proposal would be bearish if target
prices were set at relatively low levels, such as the $16-$20 per
barrel band for benchmark North Sea Brent that was suggested by
Venezuelan government sources after Saturday's meeting.

"Brent is already trading over $20," noted the broker,
suggesting a sell-off was possible if the band proposal meant oil
producers believed oil prices had peaked.

On Friday, benchmark October Brent settled at $20.76 per
barrel at London's International Petroleum Exchange.

Venezuelan oil minister Ali Rodriguez said the price band idea
was still at a very early stage.

Ali al-Naimi, Saudi Arabia's oil minister, said: "We have no
conflict with the idea of the band. It is being put forward and
it is being studied."

In after-hours ACCESS trading, volume was relatively brisk for
early Monday trade, with 404 lots changing hands in the October
contract as of 0108 GMT.