Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: GREENLAW4-7 who wrote (74505)	9/25/2000 9:18:11 AM
From: Sharp_End_Of_Drill	Read Replies (1) of 95453

More on the law of unintended consequences.... The big arrow pointing in the direction of oil flow has tipped towards Europe again. From Reuters <<London Brent futures fell 93 cents a barrel to $30.32 after a $1.48 decline on Friday in anticipation of the release which will add a million barrels a day to U.S. supplies for a month. U.S light crude in electronic trade fell $1.33 to $31.35.>> That gives a spread of $1.03 which tilts the direction of flow back toward Europe. <<Brent crude now is 13 percent below the decade-high of $34.98 a barrel set just a week ago while U.S. futures have tumbled 17 percent from a post-Gulf War peak of $37.80. >> At those prices the spread was $2.02 which is enough to justify the slightly higher shipping costs to the USA. I believe the politicos would be better letting market forces work these supply issues out. Another aspect to this SPR release is that it plants furthers seeds of doubt in the oil major's minds about increasing capex. First OPEC planted the seed with a well thought out public appearance of lacking direction on oil production increases. Now the USA sends a strong anti-market message to the majors. If this keeps up, combined with tax laws that heavily penalize inventory, we will get Simmon's grand oil crisis - Boom II. Sharp

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