"Oil Shares Jump Ahead of Supply Data"
IEA says the world needs more oil products
By Myra P. Saefong, CBS.MarketWatch.com
Last Update: 12:28 PM ET Jul 11, 2000 NewsWatch
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NEW YORK (CBS.MW) - Crude prices inched lower Tuesday while oil shares jumped as anticipation over the latest data on U.S. supplies was intensified by a key monthly report, which noted the lack of adequate product supplies in the world market.
On the New York Mercantile Exchange, August crude fell 13 cents to $29.56 a barrel. August heating oil climbed 0.47 cent to 78.40 cents per gallon and August unleaded gasoline added 0.16 cent to 95.10 cents per gallon. August natural gas fell 1.8 cents to $4.21 per million British thermal unit.
In a monthly report, the International Energy Agency said the “oil markets need more product, especially gasoline for current use and heating for next winter.”
It also noted that June OPEC oil production fell to 28.29 million barrels per day to 28.05 million barrels per day.
In other news, President Clinton announced a plan Monday to release 2 million barrels of oil from the U.S. strategic petroleum reserve to create a heating oil reserve in the Northeast.
OPEC oil producers continue to mull over Saudi Arabia’s plan to increase production by 500,000 barrels per day to help lower crude prices. Venezuelan Oil Minister Ali Rodriquez is scheduled to meet with Ali Naimi, Saudi Arabia’s oil minister on Wednesday.
Supply update due
Weekly petroleum supply data from the American Petroleum Institute is slated for release after the market closes.
Analysts expect that last week’s crude oil supplies rose between 1.7 million and 2.2 million barrels, according to a Bridge News survey.
Gasoline supplies, as of the week ended July 7, likely fell by 1.2 million to 1.7 million barrels, the survey said, while distillate inventories likely rose by 2 million to 2.4 million barrels.
Refinery production rates are expected to be up by 0.4 percent to 0.8 percent from the prior week’s 94.9 percent.
Market awaits oilfield service group second-quarter results
Upcoming second -quarter earnings releases will mark one of several important milestones for the oil service group, Frank Bracken III of Jefferies & Co. said in a weekly research note.
Bracken expects that second-quarter earnings will be only “moderately improved” quarter-over-quarter and that a few companies will have a down quarter.
However, he said that oil stocks can stage a moderate rally when key earnings are released as managements will likely highlight the “many positive fundamental developments,” in oil service activity expected for the second half of 2000 and 2001. Highlights could include strong oil prices, strong natural gas prices and high North American drilling activity, Bracken said.
In the equities market, the Philadelphia Oil Service Index ($OSX: news, msgs) rose 6.3 percent while the CBOE Oil Index ($OIX: news, msgs) rose 2.3 percent.
Within the indexes, shares of Transocean Sedco Forex (RIG: news, msgs) gained 3 3/4 to 51 1/4 in recent trading. Shares of BP Amoco (BPA: news, msgs) rose 15/16 to 57 1/16 after the company announced it expects to grow its earnings by at least 10 percent over the next three years. See related story.
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Myra P. Saefong is a reporter for CBS.MarketWatch.com.
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