Oil-service issues continue decline
Afghanistan strikes fail to spark supply worries
By Myra P. Saefong, CBS.MarketWatch.com
Last Update: 10:29 AM ET Oct. 8, 2001
NEW YORK (CBS.MW) -- Shares of most major oil-service companies declined for a second-straight day Monday, untouched by the effects of the start of U.S.-led air strikes on Afghanistan.
British and U.S. warplanes and ships struck numerous targets within Afghanistan on Sunday, but from a supply-and-demand investment perspective the military effort "will decidedly not be similar" to Operation Desert Storm 10 years ago, said Fimat energy analyst John Kilduff in research note.
It does not involve the oil-producing regions, and the use of planes and ground vehicles will be more limited as the nature of operations will be defined by Afghanistan's largely desert terrain, he said.
By contrast, Desert Storm had required coalition forces to employ "hundreds of energy-hungry vehicles and airplanes" in driving Iraqi forces out of Kuwait, Kilduff said.
"Prolonged operations will cause an increase in demand for petroleum products," he noted, "but that shouldn't be felt for some time."
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Crude futures prices fell Monday as traders assessed the U.S. air attacks, keeping in mind that OPEC has not yet decided to cut production. Speculation about what the cartel might do heightened as of Friday, reflecting how prices have been below the $22 a barrel for 10 straight days.
OPEC has in place an agreement calling for members to raise or lower aggregate production by 500,000 barrels per day if prices rise or fall out of its $22-to-$28-a-barrel targeted range.
Secretary General Ali Rodriguez said the cartel wants to assess the impact of the anti-terrorism campaign before deciding on any further restrictions, according to Kilduff.
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