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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Box-By-The-Riviera™ who wrote (39710)3/12/1999 8:57:00 AM
From: JungleInvestor  Read Replies (4) of 95453
 
In reality Saudi Arabia "sacrificing" a quarter of the cuts or 500,000 bbl/day is not a sacrifice because they are keeping the bulk of the share they picked up from Iraq (wasn't that more than 2 million bbl/day?). As negotiations were going on over the last several weeks and the 2.3 million bbl/day cut (3% of total production)was mentioned by participants, oil prices rose 30%. (a great big carrot - cut 3% and prices rise 30% or more). Yesterday when traders were "skeptical" about an agreement to cut, oil prices fell significantly (great bit stick). With this built-in natural carrot and stick consequence, I think that there is a very high probability now that OPEC and some non-OPEC producers will agree on a significant cut. This bull rally is like Coca Cola - it's the real thing (poor fellow that said he was going to short yesterday).

Interesting commentary on Bloomberg today. Analysts are saying that Japan is now recovering. SONY restructuring is very promising because this sort of thing has not been done in Japan and it will probably lead to more restructurings. As the market anticipates the Japanese recovery, it is also anticipating a much greater demand for oil. A factor in addition to the potential OPEC cuts that is driving up the price of oil, is that money managers are investing in oil and oil stocks as a play on the Japanese recovery.
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