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: JungleInvestor who wrote (39716)	3/12/1999 9:26:00 AM
From: Crimson Ghost	Read Replies (1) of 95453

Jungle: If you recall I have argued for a long time the basic economics would dictate to prodcers that they must hang together or hang seperately. That is the demand for oil is very inelastic; a modest surplus sends prices crashing and a modest shortfall sends them surging. My argument that a 5% cut in supply would lift prices 30-50% is being born out by reality. I still say the the prime cause for the failure of the big oil producers to agree on cuts in the past was US opposition and its ability to dictate the oil policies of key OPEC memebers Saudi Arabia and Kuwait to a large extent. I also opined that oil prices were recently too low for even the US and we would no longer attempt to block an OPEC agreement. No proof, but I suspect that this is a key factor behind the much better news we are hearing on the oil front these days. But if and when oil threatens to go above $20 look for US to do all it can to keep such a breakout from happening.

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