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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: HH who wrote (16476)3/25/1998 1:17:00 PM
From: Czechsinthemail  Read Replies (2) of 95453
 
HH,
But what does any one think of the possibility of the producers getting together and creating a production shock.
Well you could say that the OPEC meeting that raised production quotas already fulfilled the negative version of that. As much as people like to worry about the producers' inability to pull off production cutbacks, oil prices have strengthened considerably around the expectation that they will. Whatever production cuts they make are happening at a time when crude prices are normally rising. This can have a double-barreled impact on prices because you get the combined effect of reduced production and rising demand. While understandably many around here focus on how oil prices might drop if the agreement unravels, there is also the uncertainty factor encouraging short-covering and forward buying of crude around the possibility that prices might move significantly higher. Crude is trading up again today.
Baird
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