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Extension of OPEC's Limits on Supplies Likely to Be OKd

November 26, 1998|From Reuters

VIENNA — OPEC oil producers on Wednesday agreed to the essentials of a new pact that extends standing supply curbs but fails to take new measures to lift oil prices from historical lows.

"That's it. We have reached an agreement. We will announce it tomorrow," Saudi Oil Minister Ali al-Naimi told Reuters. He declined to give details but delegates to the talks said OPEC ministers would sign off on a deal today that would prolong by six months, to the end of 1999, existing output limits put in place in June.

"There are one or two quibbles over wording of the communique," said one senior delegate. Ministers were to meet this morning to finalize the text.

Delegates who had seen a draft communique said the key clause to be thrashed out referred to a commitment to possible further action on output at OPEC's next meeting. Those talks will be brought forward by three months to March.

But the finer details of the infant agreement were lost on traders who had already sold oil futures to new lows in anticipation of the deal. Prices for West Texas Intermediate crude oil for January delivery closed 26 cents lower at $11.86 a barrel at the New York Mercantile Exchange, just above the 12-year low of $11.65 seen in June.

North Sea Brent on Wednesday traded down 29 cents to close at just $10.92. Oil this year, on average at $13.66 a barrel for Brent, is priced lower than at any time since 1976.

"There is going to be downward pressure on prices," said Jeremy Hudson of Salomon Smith Barney. "We may see oil flirting with $7 to $8 a barrel."

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