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Preview | WEEK OF SEPT. 16-22

OPEC Expected to Raise Oil Production Target

September 16, 2002|Bloomberg News

OPEC is expected to agree this week to boost production quotas for the first time in two years, as a 45% surge in oil prices threatens to slow demand and spur rivals to boost output, investors and traders said.

The group will raise its target by about 950,000 barrels a day, or 4.4%, according to forecasts in a Bloomberg survey of 24 analysts. An increase would send U.S. oil prices down by $2 a barrel from almost $30 now, the survey showed. Twenty of the analysts expected an increase, and the rest saw no change.

The Organization of the Petroleum Exporting Countries meets Thursday in Osaka, Japan, as the threat of war in Iraq and the approach of an annual peak in demand threaten to drive prices higher. OPEC pumps a third of the world's crude oil, and some members are concerned that more supply and a slowing U.S. economy may cause prices to plunge.

"This is probably the most important OPEC meeting for quite some time," said Mario Traviati, a Merrill Lynch & Co. analyst in Singapore, who expects an increase of 1 million to 1.5 million barrels a day from 21.7 million. "For almost the last two years it's always been a question of, 'How much are they going to cut?' "

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