Two-body correlation functions obtained in a LOCV calculation on nuclear matter using the Reid soft-core potential are state averaged and then used to calculate the three-body convergence parameter kappa 3 and three-body cluster energy E3. kappa 3 is found to be less than 0.1 for Fermi momenta kF<or approximately=1.6 fm-1 and the three-body cluster energy changes the saturation binding energy by a fraction of an MeV per nucleon. The inclusion of the three-body clusters does, however, significantly reduce the saturation density. The authors conclude that, allowing for explicit excitation of the N*(1234) and including up to three-body clusters, the Reid potential yields nuclear matter saturation properties close to those predicted by a semi-empirical analysis.