OPEC may be forced to meet before a
scheduled June session to readdress its production cutting
agreement if the organization wants to halt the current slide
in oil prices, oil industry analysts said.
    "The movement to higher oil prices was never to be as easy
as OPEC thought. They may need an emergency meeting to sort out
the problems," said Daniel Yergin, director of Cambridge Energy
Research Associates, CERA.
    Analysts and oil industry sources said the problem OPEC
faces is excess oil supply in world oil markets.
    "OPEC's problem is not a price problem but a production
issue and must be addressed in that way," said Paul Mlotok, oil
analyst with Salomon Brothers Inc.
    He said the market's earlier optimism about OPEC and its
ability to keep production under control have given way to a
pessimistic outlook that the organization must address soon if
it wishes to regain the initiative in oil prices.
    But some other analysts were uncertain that even an
emergency meeting would address the problem of OPEC production
above the 15.8 mln bpd quota set last December.
    "OPEC has to learn that in a buyers market you cannot have
deemed quotas, fixed prices and set differentials," said the
regional manager for one of the major oil companies who spoke
on condition that he not be named. "The market is now trying to
teach them that lesson again," he added.
    David T. Mizrahi, editor of Mideast reports, expects OPEC
to meet before June, although not immediately. However, he is
not optimistic that OPEC can address its principal problems.
    "They will not meet now as they try to take advantage of the
winter demand to sell their oil, but in late March and April
when demand slackens," Mizrahi said.
    But Mizrahi said that OPEC is unlikely to do anything more
than reiterate its agreement to keep output at 15.8 mln bpd."
    Analysts said that the next two months will be critical for
OPEC's ability to hold together prices and output.
    "OPEC must hold to its pact for the next six to eight weeks
since buyers will come back into the market then," said Dillard
Spriggs of Petroleum Analysis Ltd in New York.
    But Bijan Moussavar-Rahmani of Harvard University's Energy
and Environment Policy Center said that the demand for OPEC oil
has been rising through the first quarter and this may have
prompted excesses in its production.
    "Demand for their (OPEC) oil is clearly above 15.8 mln bpd
and is probably closer to 17 mln bpd or higher now so what we
are seeing characterized as cheating is OPEC meeting this
demand through current production," he told Reuters in a
telephone interview.
 Reuter