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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 660.19

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Nov 18 4:00 PM EST

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To: pater tenebrarum who wrote (26709)	9/22/1999 7:03:00 PM
From: Rick Hay	Read Replies (2) of 99985

Heinz: I wish I could find the study on this and I'll look for it tonight. There are a number of forces building up in the price of oil where Y2K will have a big impact. First most OPEC nations are not prepared in their production systems for Y2K. Especially Venezuela. A serious disruption WILL result in January. Plus with OPEC not willing to meet until March and the surplus expected to be used up by Dec. 99 this sets up for a sky rocketing oil futures as Y2K approaches. The only saving grace is it may be a warm winter in which case housing heating oil contracts could be kept down somewhat but I still think supply will out strip demand in January and have a huge effect on the market. Yesterday was hillarious as everyone all of a sudden woke up to the trade deficeit and the drop in the dollar. We've been following that aspect of the economy on this thread for some time now. IMO the deficiet numbers were well in line with other economic data we've seen. Sales are brisk. What scares the heck out of me is when the market wakes up to the fact that there will not be enough oil for the current demand levels period. There is only a 9 day buffer in the US reserves for oil. Japan carries 3 months. I know this because I am working on a project with Japan National Oil Company (state run oil company) and I get a lot of insight from these lads who have gone through a terrible recession already. Guess who's gonna get hit the hardest this winter? Available cash is not the issue here. Most are comfortable with the banks having their Y2K issues under control. Many announcements to that regard have come out already. It's the foriegn commodity markets espeically oil which are going to provide the best hedge over the next 6 months. North American rig counts are up substantially but only about 60% of the peak boom levels we saw 2 years ago. This will not be enough to compensate for the production drops seen in International markets. Too little, too late. Agree / Disagree? Regards, Rick

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