Bull, one of the things I have been looking for is an OPEC committment to extending the cuts beyond next March. It never made sense that they would raise output during the shoulder season so if this is true, it is very positive especially if the IEA drawdown estimates for 4Q/1Q prove to be accurate.
cnniw.newsreal.com@2@3@3@1030&path=News/Category.NRdb@2@7
Oil gets double boost
Source: CNNfn
LONDON (CNNfn) - A double dose of good news for the oil industry on both sides of the supply and demand chain lifted both petrochemical stocks and the price of benchmark crude Tuesday.
The biggest impetus came from Kuwaiti oil minister, Sheikh Saud Nasser al-Sabah, who said the 11 members of the Organization of the Petroleum Exporting Countries had already agreed in principle to extend their output limits beyond next March's expiration date.
"We will discuss the duration of extending the current accord in March but the principle has now become acceptable," Sheikh Saud told Reuters.
His comments came on the same day that the Paris-based International Energy Agency said the current OPEC cuts had started to make significant inroads into the oil inventories in the northern hemisphere.
The draw-down in stockpiles comes just before the period of highest demand - the northern hemisphere winter. Stocks fell by 1.8 million barrels per day (bpd) in September and the IEA said rising demand during the winter was likely to cut inventories at a record rate.
Assuming steady OPEC output is maintained, stockpiles among OECD countries would fall by 2.6 million bpd in the last quarter of 1999 and 3.6 million bpd in the first three months of next year.
Commercial inventories by end-September stood 104 million barrels above 1996 historic lows. The IAE said higher oil prices had tempted some OPEC members to slightly raise output but that compliance was still running around 85 percent in October. The double whammy lifted the price of a barrel of benchmark Brent crude by 24 cents to $23.52 in London, pushing it nearer to October's 33-month high of $24.30.
This in turn boosted oil stocks, with BP Amoco surging more than 5 percent to 594 pence in London, while rival Shell gained 3.5 percent to 464 pence.
French oil stocks also rallied. Elf Aquitaine surged 5.7 percent to 145.80, while its merger partner TotalFina jumped 2.3 percent to 126.20.
Under the output curb, signed in March this year, OPEC agreed to cut supply by 1.7 million barrels per day, from the world market. Additional pledges from non-OPEC members Oman, Norway, Mexico and Russia took the total cutbacks to 2.1 million barrels daily. |
