OPEC Moves Closer to Plan to End Glut : Energy: Key members of the oil cartel report progress in strategy talks aimed at curbing production to boost prices.

From Reuters

OPEC appears to be edging toward a price and production accord that may begin to erase a glut that has slashed world oil prices by a third this year.

Key ministers report progress in strategy sessions ahead of a conference of the Organization of Petroleum Exporting Countries in Geneva on July 25.

They say the goal is a pact to restore average spot prices to OPEC's declared target of $18 per barrel.

Benchmark prices in Europe are around $14, down from $21 at the start of the year. West Texas Intermediate, the U.S. benchmark, which normally sells at a premium, is trading at $16 a barrel, down from around $22 at the beginning of the year.

"I think we have a better chance now," Indonesian minister Ginandjar Kartasasmita said after talks in Algiers last week with OPEC President Sadek Boussena of Algeria and Kuwait's Rasheed Salem al Ameeri.

More preparatory talks, this time among Persian Gulf producers, are scheduled this week.

The 13-nation cartel's internal crisis arises from the ambitions of three big gulf producers--Saudi Arabia, Kuwait and the United Arab Emirates--to sell more of their oil. Their demands for bigger production quotas have stymied several recent OPEC conferences.

The gulf trio's quota-busting earlier this year was the chief cause of the glut in the market.

Although the Saudis, the biggest exporters, cut their excess production under a stopgap agreement negotiated May 3, Kuwait and the UAE were slow to follow suit, and prices have stayed weak.

OPEC sources say a compromise that ministers are examining would extend the stopgap accord to the end of September. After that, the gulf states would get new, bigger quotas--provided that in the interim they curb excess output and prices climb back to $18 per barrel.

Demand usually picks up in the winter, so, in theory, it would be possible to set a higher ceiling on total OPEC volume and raise individual quotas from October onward.

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