OIL STOCKS Pretty much a good day all around for oil stocks. Mobil (MOB) 77 9/16 + 3 1/16, Chevron (CHV) 87 +3 , Amoco (AN) 55 1/2 +1 5/8, and Exxon (XON) 72 7/16 +1 13/32 all doing well. Oil stocks continue to follow a different drummer than the rest of the market, as most are above their prices in July, when the overall market peaked. Oil prices have continued to rise since reaching a low of $13 a barrel earlier this year. December futures are now trading at close to $16 a barrel. Adding to interest in the oil stocks is the mega-summit being held this weekend in Italy. Sponsored by Petroleum Finance Co, a Washington DC consulting firm, there is representation from around the world. Saudi Aramco, the world's largest oil company (owns 25% of known global reserves), OPEC, Chevron, Anadarko (APS), Elf Acquitaine (French oil company), Halliburton (HAL), the National Iranian Oil company, PetroCanada, Repsol (Spain), SASOL (South Africa), Sonangol (Angola) , Statoil (Norway) will all be there. Exxon, Mobil, Texaco (TX), and Amoco are not attending. The sponsor is including US Energy lawyer Lynn Coleman who will "police" the discussions to keep everyone away from any hint of price-fixing or cartel planning. Oil is a paradox right now. Deflation is a worry, but oil prices are rising.
The world has too much supply, and major buyers in Southeast Asia have curtailed consumption. But oil companies have cut back development and capital outlay budgets. It is the type of environment that leads to consolidation in an industry. Is this weekend's meeting really just a social mixer for future partners? Not sure, but the end result is increased interest in the oil companies, as today's prices show. from briefing
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