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Gold/Mining/Energy : Trico Marine Services (TMAR)

TMAR 22.42

0.0%

9:47 AM EST

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To: Gameboy who wrote (775)	8/26/1998 4:44:00 PM
From: D.J.Smyth	of 1153

<<2) OPEC made a miscalculation and increased production by around 3 million barrels per day. They obviously have the ability to choke off production - if they don't, OPEC countries could be the next Russia, or Indonesia, or Nigeria. OPEC is getting lot's of help because at the low prices they've caused the oil production infrastructure is crumbling (we're seeing rig counts down and marginal well are being shut down).>> the "crumbling infrastructure" should bring higher stock prices, i.e., the semiconductors in early 1997 raced up 100% ahead of production data within a few months. now, the oil sector (just like the semi sector was then) is so oversold, the only buyers left are shorts. its takes time to rebuild infrastructure once it's down. an article on the api.org web site states that refiners have been purposefully increasing production to help keep prices low as the spread between the current oil price and price at the pump is greater than the spread at $18 oil. so, you decrease or even slow down oil delivery to the refiners and you (a) increase the price of oil short term and (b) create some panic buying in the spot market. refineries are working at 96% capacity. in 1988 with $12 oil, refineries were working at only 76% capacity. refineries can't produce more than 100% of their capacity. i was informed a few minutes ago that in Alaska ARCO and BP are EXTREMELY busy with new hires and extended drilling subcontracts (VECO, etc.). my friend told me that the internal scuttlebut is that they're expecting some "good news" very soon (i assume this means higher oil prices). LOTS of activity there.

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