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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Gameboy who wrote (31112)10/25/1998 11:12:00 AM
From: articwarrior  Read Replies (1) of 95453
 
There is more to the supply/demand curve then over/under production of a commodity. I have a great respect for the production side of the house in OPEC trying to reduce production. However, demand has been decreasing faster which shifts the curve to a new level. The present overhang of oil is only one side of the picture; Your looking at figures in a vacuum.

" During 1998, worldwide demand for oil has increased by about 1 million barrels/day."

I'd like to see the above stats and just when they were published. Demand for oil has decreased over the last several months. The futures pricing model evidence this. I also use the arbitrage-pricing model. The oil market is efficient. An efficient market only has short-term aberrations before correction.
I agree that up until mid 1998 demand was very strong. But not in the last quarter.

Even though I am "Long" in the oil/gas service sector I cannot ignore the basic fundamentals of economics. The Sector "WILL" correct short term. In all likely hood it will retract 30 % from its run-up.
This presents an excellent opportunity for those who are "Trading Oil" to reap benefits of a short-term condition!

Although one side of me wants to "BUY BUY BUY"
Cause these prices look fantastic compared to 5 months ago,
I will restrain, use patience and buy the corrections.

Thanks

Ken
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