Cuts in OPEC Output May Push U.S. Crude Prices Up
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NEW YORK — Sharp cuts in OPEC’s oil output are likely to boost U.S. crude oil prices above $18 a barrel by the end of the month but other conflicting factors in the market could push prices lower, analysts said.
The key, oil industry analysts said, is whether OPEC producers are able to maintain output close to their quota, draining high worldwide inventories of oil. OPEC’s quota for the first half of 1988, minus Iraq, is 15.06 million barrels per day.
Crude oil contracts traded on the New York Mercantile Exchange closed Friday at $17.28 a barrel, up 14 cents.
“The market is too close to call now. The next six weeks are critical,” said a planning expert with one major oil company. “Prices could go either way.”
World inventories of oil are estimated to be about 14 days’ worth, well above the 10-day inventory level that most industry leaders consider to be an optimum level to support prices. To whittle inventories that low means OPEC production must stay below an average of 17.9 million barrels a day in 1988, he added.
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