FUEL Ministers want OPEC to carry out output cut

OPEC is aiming to avoid a big drop in oil prices.
VIENNA, Austria (AP) -- Despite the current high price of oil and gasoline in the United States, the market is more than well-supplied, and OPEC should implement a planned 4 percent cut of its output target, several oil ministers argued ahead of today's meeting in Vienna.
The 11-member Organization of Petroleum Exporting Countries decided in February to reduce its output target by 1 million barrels per day starting Thursday, and it will go ahead with the plan, Saudi Arabian oil minister Ali Naimi said.
Oil ministers from four other countries -- Venezuela, Libya, Algeria and Iran -- made similar arguments.
OPEC supplies about a third of the world's oil. Its current output target is 24.5 million barrels per day. Naimi argued that the group can't be blamed for the high prices, saying investors and speculators have boosted the prices to their highest levels since the 1991 Gulf War.
Careful balance
As the group sets its policy today, it must carefully balance consumers' need for lower prices with its member countries' fears that increasing stocks and a seasonal lull in demand could reduce prices too much.
Abdullah bin Hamad al-Attiya of Qatar said OPEC is "trying to avoid a [price] shock."
"We don't want to wake up with a disaster," he said.
If the group follows through on its Feb. 10 agreement to cut its production target to 23.5 million barrels, it risks driving up crude prices toward the psychologically important threshold of $40 per barrel. That could damage the global economy and the long-term demand for oil, said John Waterlow, an analyst at Wood Mackenzie Consultants in Edinburgh, Scotland.
However, if the group postpones its promised cut, it may hurt its credibility and oversupply the market just as demand starts to slow in the second quarter. The result could be "a precipitous fall" in prices that OPEC wants to avoid, Waterlow said.
High prices
Prices are already uncomfortably high for importers and consumers. U.S. light, sweet crude reached a 13-year peak of $38.35 per barrel March 17, with the futures price for May delivery around $36.30 per barrel Tuesday in New York.
In the United States, Sen. Charles Schumer of New York urged President Bush to pressure OPEC to boost production in an effort to increase oil supplies and help U.S. motorists, who are paying record prices for gasoline.