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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Wowzer who wrote (47179)	7/1/1999 8:11:00 AM
From: Captain James T. Kirk	Read Replies (1) \| Respond to of 95453

July 1 7:19 AM ET Oil Soars As Bulls Raise The Tempo By William Maclean LONDON (Reuters) - Rallying oil markets added to 18-month highs Thursday as OPEC output cuts ate further into surplus inventories in major Western consuming countries. Benchmark Brent crude traded 15 cents higher at $17.69 a barrel after racing up 72 cents Wednesday when speculators bought heavily on news of a fall in U.S. crude stockpiles. Dealers said buying was also driven by fears that a threatened tariff on imported oil from four major producers would hike import prices into the United States. The renewed rally prompted market observers to warn producers of an overheated market later this year. ''The problem for producers now is how do you take your foot off the accelerator,'' said John Toalster of SG Securities. ''The price is now virtually guaranteed to go far too high. That is a much nicer problem than the one you had last year with low prices. But it is still a problem.'' Analysts said OPEC supply curbs were tightening the supply-demand balance in world oil markets and meant prices might easily overshoot a cartel target price of $18-$20 Brent. Some see it sailing above $20 in coming months if the Organization of the Petroleum Exporting Countries producer club continues to adhere closely to output cut pledges. ''All the signals are right for those who predict a tightening of the market before the end of the year,'' said independent analyst Geoff Pyne. Added strength has been injected by a request by a group of independent American oil producers for the U.S. government to investigate whether foreign nations dumped oil in the United States at below fair market value. ''This submission to the Commerce Department has really thrown the oil market a bouncer,'' said Peter Gignoux, head of the energy desk at Salomon Smith Barney in London. The group is seeking countervailing duties against the four targeted countries, Saudi Arabia, Mexico, Venezuela and Iraq which together account for just over half of the nine million barrels daily of U.S. oil imports. If they are found guilty of dumping, duties could be imposed on their crude shipments, which would raise oil prices paid by U.S. refineries and most likely increase gasoline prices at the pump for consumers. Experts say too rapid a price recovery could hit demand in still-fragile Asian economies that for much of the past 20 years have been the engine of global demand growth. Longer term it could also encourage higher cost producers outside of OPEC to bring on production that will eventually unleash a flood of new oil and depress prices all over again. Wednesday's gains occurred after the American Petroleum Institute (API) industry group reported a near 500,000 barrel drop in U.S. crude stocks in the week to June 25. Brent has risen by more than a third since a latest round of output cuts was agreed in mid-March by OPEC and major exporters like Norway and Mexico. Compliance with the output cuts has been running at almost 90 percent and is expected to stay high. Some analysts have said the rapidity of the price rally may require a decision on the timing of any upward OPEC output adjustments at the next meeting of the group in September. ''As the year progresses we expect attention to shift to the timing of an increase in OPEC's output ceiling,'' said Merrill Lynch in a note to clients. In terms of export revenues, many producers may feel the rally should be allowed to develop for some time to come without hindrance in order to make up for last year's financial losses. They argue that despite the rally this year that halted the devastating price slump of 1998, it can only lift revenues in any meaningful way by enduring for many months. --------------------------------------------------------------------------------