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: Mike from La. who wrote (38134)	2/24/1999 1:57:00 PM
From: SliderOnTheBlack	Read Replies (3) of 95453

EIA numbers - ''It's the production numbers - stupid !'' (not supply)... << In the U.S., marginal wells are being shut in due to low oil prices, with this week's production estimated at 5.9 MMBD compared to the 6.4 MMBD estimated a year ago. >> 6.4 M last year minus 5.9 M this year = 500K bpd less production ...looking 6 months forward; 180 days x 500,000 bpd = 90,000,000 BOE potential drawdown - now ''if'' refiners quit importing historically cheap crude oil - and keeping storage filled to the brim ---> how long untill our entire US supply glut would be eliminated ? Obviously it is good business for refiners to import anything and everything that the US producers cut. Why wouldn't they load up and keep storage overflowing ? An Enigma here; obviously it is good business for refiners to keep every single drop that they can in storage - what retailer of any product wouldn't buy boatloads, carloads, or semi's full of product if it was at historically low prices and efforts were under way to raise prices - which means his profit margin gets ramped up by the market ? Now, does anyone really wonder why the Saudi Oil Minister keeps preaching that the ''traders'' are manipulating the market and that we have a ''STORAGE" problem and ''not'' a SUPPLY problem ? This is why imho; the week to week 320-330M supply number swing in the US is totally meaningless right here, right now. What is important is the statistic that US production fell 500,000 bpd - or 180+ MILLION barrels per year ! OPEC's compliance at anything over 50% (now 70%) will eliminate any supply glut by year end... ''IF" they don't get greedy and play the market share game. That ''is'' the only remaining $64,000 question imho. We don't even need any more OPEC cuts... and I no longer expect any. We could blow under 320 to 300 M boe or less, potentially by year end if ''only'' OPEC doesn't ramp up from here... and if refiners even cut back imports by a small margin - do the math ! Again, watch the production numbers and NOT the supply/storage numbers ! If OPEC can adhere to present cuts and if Venezeula comes into line... Bingo ! because it is all about ''The Production numbers'' now ! Now we will really find out what Saudi's and OPEC's real intentions are... the solution is in place if everyone just toes the line... Time will tell... and it won't take long. PS - if anyone dares doubt that I am right in my theory <VBG>; - that it is all about the ''production numbers'' here - ask yourselves why are Oil prices up on this news ? Hubris - it's a wonderfull thing...

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