OPEC Leaders to Discuss Slumping Oil Prices : Energy: Saudi Arabia appears ready to consider slowing production.

Stung by a dramatic slump in the price of crude, oil ministers of Saudi Arabia, Kuwait and the United Arab Emirates will meet today in a new OPEC move to bolster the market.

Western oil company executives say the three gulf states are the most prominent among the Organization of Petroleum Exporting Countries’ 13 members that have exceeded their mandated production quotas, threatening a glut.

“The Kingdom of Saudi Arabia is worried about the deterioration in oil prices in the world market,” Saudi Oil Minister Hisham Nazer said on Monday, according to the Saudi Press Agency.

The press agency broke the news that Nazer would meet today with Kuwait’s Sheik Ali al Khalifa al Sabah and Mana Said Oteiba of the UAE in Jeddah, Saudi Arabia.

But Saudi Arabia, the biggest exporter, now seems to feel that it is time to discuss turning down the taps to mop up some of the excess from an amply supplied market.

News of the OPEC meeting pushed up energy futures on the New York Mercantile Exchange. Spot crude oil rose 7 cents to close at $17.85 a barrel.

Heating oil for prompt delivery gained 0.89 cent to settle at 54.72 cents a gallon, and spot unleaded gasoline rose 1.66 to 60.21 cents a gallon.

U.S. analysts said investors were buying unleaded gasoline futures because gasoline appears to be the only member of the energy complex that shows signs of improvement ahead of the summer driving season.

“Gasoline has a chance of sustaining itself in the short term,” said Jayne Ball with New Century Resources in New York.

Traders said the market was upbeat on the producer talks, but most agreed that prices were unlikely to stage a sustained recovery until some concrete decision was reached.

Peter Nicol, an oil analyst with Warburg Securities in London, said the gulf producers “have to play a game with market psychology now.”

“They cannot change the very short-term fundamentals. But they can signal that some production cuts are to come and perhaps persuade people to absorb higher stocks.”

But he thought a real gain in prices “is only possible if something comes out of the meeting. Saudi Arabia needs to persuade Kuwait and Abu Dhabi to cut production and it has to decide to control production. But can you see that happening?”

The London market was closed for Easter Monday.

The announcement of the meeting followed several days of feverish telephone calls among OPEC ministers as prices tumbled.

Last week, spot crude oil plummeted to a 14-month low of $16.25 a barrel because of overproduction by OPEC producers and a seasonal drop in demand.

Total OPEC output has recently run at between 23.5 million and 24 million barrels per day, exceeding underlying demand by as much as two million barrels daily, market analysts say.

Supplies in the United States are so high that storage space is running out.

While some nations such as Saudi Arabia, Kuwait and the UAE exceeded output limits, others, particularly Iran, have had to dump oil on the spot market in order to meet their quotas.

Gulf-based industry sources said contract obligations made it unlikely the gulf states could cut back at once, but reductions could be made in May.

Unconfirmed reports said Abu Dhabi, the biggest producer in the UAE, might trim output by 200,000 barrels daily in May for maintenance on its offshore fields.

Gulf oil industry sources said reluctance by the gulf states, especially Saudi Arabia, to cut output stems from fears of losing market share.

Earlier speculation had centered on the possibility of emergency talks involving all 13 OPEC members ahead of a scheduled meeting in Geneva on May 25. But gulf-based analysts said Saudi Arabia, Kuwait and the UAE were apparently against that.

Mari Buglass, an analyst in London with brokerage Shearson Lehman Hutton, said a full gathering might just result in “verbal fisticuffs” over allegations of over-production.

Analysts in the Persian Gulf, meanwhile, said the market might look firmer by the end of May, if there are production cuts soon and ahead of the seasonal rise in gasoline demand during the Northern Hemisphere summer holidays.

The UAE has in effect opted out of OPEC’s quota system calling it unfair. But it sets its own limit of 2 million barrels per day while oil minister Oteiba says there is “a red line” below which prices will not be allowed to fall.

Industry sources say Kuwait and Saudi Arabia have exceeded quotas by 300,000 barrels to 500,000 barrels daily each, although some of the Saudis’ oil may have gone to their own storage--not counted under OPEC rules.

In early May, oil ministers of Saudi Arabia, Iraq and Kuwait will meet in Riyadh for further oil market consultations.