Oil prices have risen almost 60 per cent since mid-February, when major oil-producing countries signalled they were willing to make further output cuts. In late March, 10 members of the Organization of Petroleum Exporting Countries (OPEC) agreed to fresh output cuts of 1.7 million barrels per day (bpd). Non-OPEC producers led by Mexico and Norway agreed to withdraw nearly 400,000 bpd. Share prices rose despite news Chevron Corp , the nation's third largest oil company, saw first-quarter net income fall 35 per cent to $329 million because of weak oil, gas and chemical prices.

Chevron Chairman Ken Derr said improving oil and natural gas prices were encouraging but came too late tolift earnings. But investors shrugged off the Chevron results bidded the shares up, betting that a continued recovery in oil prices would raise profits for the oil majors in the upcoming quarters. Chevron shares finished the day up $2.3125 at $98.6875. Exxon Corp, the nation's largest oil company, which reported a slump in profits on Wednesday, gained $0.50 to close at $78.9375. Mobil Corp surged $1.00 to $100.3125 while Atlantic Richfield added $0.875 at end at $80.75. Reflecting the gains, the Standard & Poor's International Oil Index, which tracks oil companies, climbed 18.91 points, or 1.14%, to 1680.69 points. The gains were made alongside an advancing broader market, which saw the Dow Jones Industrial Average gaining 145.76 points, or 1.38%, to 10717.18 points, its 10th record finish this month. Two other companies, independent Tosco Corp, and Sunoco Inc ,reported lower earnings as they experienced low refining margins and in Tosco's case, refinery troubles, cutting their share values. The rise in oilshares stem from belief that surging oil prices and improving refinery margins will "bring back oil companies to a more normal environment in the second quarter," said Stephen Pfeiffer, analyst at Prudential Securities.

"The significant rise in oil prices will make the comparison between the oil companies' first and second quarters like night and day," he said. Elsewhere in the oil industry, the oil services sector, which provides drilling and other oilfield services, also gained. The S&P Oil Service Index ended up 2.77 points or 3.78% at 76.09 points, as Schlumberger Ltd, the world's number two oilfield services company, gained $3.25 at $63.625.

OPEC to meet if prices rise

DUBAI: Libyan oil minister Abdullah Salem al-Badri was quoted as saying OPEC could meet to adjust oil production levels if oil prices rose too high. "If the prices go up too much we can hold a meeting of the organisation to adjust our production to enable us to reach reasonable prices beneficial to producers and consumers,"he said.

"Prices will rise. Expectations point to the oil price reaching $18 a barrel by the end of the year. If OPEC adheres to its total quota the average price of oil for 1999 will be around $16 a barrel," he said. "Oil prices will rise and I advise not to aim for increasing production because prices have improved," he added.