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To: Charles A. King who wrote (10636)	7/11/1999 10:14:00 AM
From: Ferick	Respond to of 13091

Shortage of oil by winter is feared The impact could be steeper gas prices, general inflation and higher interest. By: Bruce Stanley - Associated Press London, England - The biggest oil shortage in more than a decade is looming this winter, a respected industry survey warned Friday. To blame are OPEC's cutback in crude production and a rising demand for gasoline and other refined products. The report by the International Energy Agency acknowledges that a further spike in prices, which have almost doubled since December, would probably tempt oil producing countries to break ranks and boost output significantly. Continued economic growth in the United States and the resurgence of activity in Asia should help boost gloval demand for oil by 1.84% in the third quarter of the year and 2.38% in the fourth quarter, according to the Paris based agency. The IEA is part of the Organization for Economic Cooperation and Development. It predicted slower growth in world oil supplies as a result of OPEC's discipline so far in complying with output cuts agreed to in March. The result could be a shortfall of 1.61 million barrels a day in the third quarter. A shortfall of that magnitude is unusual, and if current trends continue, it "will trigger one of the biggest quarterly stock draws (shortfalls) in history," the agency said. Higher oil prices would push up the costs of almost all asspects of daily life, from filling up at the gas pump to higher shipping costs for groceries and merchandise. Rising inflation would push up interest rates, which could cool off economic growth. The fourth quarter shortage could be as large as 3.24 million barrels per day - a level last seen during exceptionally cold winter of 1987. Barney Gray, an analyst at the brokerage Williams De Broe, dismissed this forecast as a "scare story." Members of the Organization of the Petroleum Exporting Countries, who agreed in March to trim output by 4.32 million barrels per day, would probably start cheating if prices rose much higher, Gray said. "OPEC" has been very disciplined since March, with very high compliance. We want it to stay that way. The price for widely traded West Texas Intermediate crude has been rallying strongly as evidence mounts of OPEC's unusual discipline, climbing to 19 month highs this week and flirting with $20 a barrel. The gain in June alone was $2.97 per barrel. Contracts for August delivery of West Texas INtermediate rose 23 cents Friday to close at $19.94 a barrel on the New York Mercantile Exchange, almost twice the Dec. 11, 1998 low of $10.65.