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To: oilbabe who wrote (49994)	8/28/1999 9:29:00 AM
From: oilbabe	Respond to of 95453

Oil Producers, Emboldened by Rally, Plan to Discuss Price Band Oil Producers, Emboldened by Rally, Plan to Discuss Price Band Caracas, Aug. 27 (Bloomberg) -- Saudi Arabia, Venezuela and Mexico, which orchestrated oil production cuts that helped double prices, are planning their next coup: to permanently link world output to prices and keep up a steady flow of profits. The oil reductions the three pushed through in a series of meetings starting last year not only sent prices soaring, they gave the once-moribund Organization of Petroleum Exporting Countries new discipline in managing world oil supply, after prices fell to 12-year lows in December. ``There's been a serious underestimation among the analyst community about the change in this cartel,' said Bill O'Grady, director of fundamental futures at A.G. Edwards & Sons in St. Louis. Linking output to prices ``makes great sense, and there are three or four players here taking on major responsibility.' The latest plan, which the three will work on this weekend in Caracas, is being called a price band, in which a target price range is set and oil output is raised or lowered until the range is achieved. In recent years, OPEC output quotas were often ignored by members eager to earn as much as they could from oil exports. No range has been agreed to so far, though analysts generally see $20 a barrel for Brent Crude oil as a possible target. Brent today was trading at about $20.50 on the International Petroleum Exchange in London. ``The band would start wide with a generous floor and ceiling based on producer nations' target prices,' said Venezuela's Energy and Mines Minister Ali Rodriguez. ``Later, as we see prices adjust, it would tighten to be a very slim band.' No Decision Expected Rodriguez said the band won't be determined at this weekend's meeting, but instead will be subject to consensus between OPEC and non-OPEC members. The participation of non-OPEC Mexico in the output cuts with OPEC members Venezuela and Saudi Arabia may signal the relationship among world producers will stay strong, after many saw their economies crumble along with oil prices last year. Venezuela, which until this year had ambitious plans to increase production to 6 million barrels a day by 2008, saw its economy shrink 8.2 percent in the final quarter of 1998 as oil prices plunged. After cutting back it's output goals and helping spearhead the output cuts, the price of Venezuelan crude products soared to an average of more than $18 from a low of $7. OPEC in March agreed to a round of production cuts that now equal about 7 percent of former daily supply, including cuts made last year. Venezuela, once one of the biggest over-producer in OPEC, is now the group's most strident supporter of the cuts. Rodriguez is scheduled to meet with the Saudi Arabian Petroleum Minister Ali Naimi and Mexican Energy Secretary Luis Tellez tomorrow. The three plan to announce the progress of talks at 5 p.m. local time (5 p.m. New York time) at a news conference. The meeting comes less than a month before OPEC's biannual meeting in Vienna beginning September 22. Possible Competition All three countries have said they don't plan to raise oil output until the current reduction agreements expire at the end of March 2000. The quandary facing the ministers now is that this year's rally may induced other producers to boost output from expensive wells, eating into OPEC's market share and endangering the rally. With that in mind, Rodriguez warned yesterday that OPEC doesn't want to see prices creep much higher. ``What OPEC must study is up to what point it is convenient for prices to rise,' he said. They already may have climbed too far. Domestic U.S. oil production is up 99,000 barrels a day from a low earlier this year, or 17 percent of the 569,000 barrels that were forced out during last year's price slump, American Petroleum Institute figures show. And more could be on the way: The number of U.S. production and exploration rigs, including oil and natural gas, is up 17 percent since April, according to Baker Hughes Inc. More than Double New York futures have more than doubled since December's low close to $10 a barrel. The October contract traded about $21 a barrel today on the New York Mercantile Exchange. The ministers may see price bands as a way for the world's biggest producers to keep smaller outsiders from flooding the market. ``What we've proposed is a price band with a lower and upper limit -- and many are welcoming this appeal,' said Rodriguez. The band would mean that producers would agree to increase production if prices surpass the top of the band, or cut output if prices sink below it. The trick is to pick a range that delivers the most earnings while keeping high-cost wells in other nations capped. ``It's not brain surgery,' said O'Grady. ``It's essentially a swing-producer scheme, and they are probably trying to engineer prices down to about $18 a barrel' for benchmark West Texas Intermediate. And while there's no certainty the plan will work, Venezuela is so sure of OPEC's newly found discipline that it is arranging to host an OPEC heads-of-state meeting in Caracas next year, uniting top leaders from member nations for the first time since 1975. ``The confidence that hasn't exactly been characteristic of OPEC in recent times -- it's back,' Rodriguez said. --------------------------------------------------------------------------------

To: oilbabe who wrote (49994)	8/28/1999 1:51:00 PM
From: diana g	Read Replies (2) \| Respond to of 95453

Hi oilbabe! You wrote "...I did exactly what Slider suggested, and sold just 60 cents higher for a substantial profit ... Well, you didn't really do exactly what Slider suggested, did you? In the post Rory linked, Slider said: "...See you at $4, then $6.... this is 'the' play in Micro Cap Nat Gas E&P land imho. No reason to sell prior to $4-$6 imho. If MEXP isn't $4 and a double by XMAS - I will never post on SI - ever again - period. ..." So far MEXP hasn't made it to $4, but your trade was a profitable one --- congratulations and may you have many more! And while MEXP is not my style, good luck to MEXP and all who sail in her! I'm sure Rory meant that reference as good-natured kidding. (I did bookmark it, tho, for year end. Just in case.) <VBG> -------------- On a more general note (By which I mean I'm not talking about anybody in particular)--- You wrote "...With small caps, timing is everything, and you can't expect someone to get on this board every ten minutes to say "time to sell, now"..." Well, Yes, One could reasonably expect something like that, imho. If I post my recommendations for purchases, and tell you "I'm buying ABC @ $12 and holding for $20 by years end. Everybody else should buy it and hold it too." I think you would be right to be indignant if you followed my advice, and were still holding ABC some months later and it had dropped to $6, and found out I had sold it the day after I bought it and not said so. If one wants to give advice or post their trades, it seems to me there's a responsibility to tell the rest of the story. To do so thoroughly and scrupulously. And promptly, especially if the trade closes out a previously recommended move. Also, if there were not a convention that this be done relatively promptly, it would be far too easy for a self-promoting liar to look at the charts and make claims about when he bought and sold ---"ABC? Oh yeah, that one. I sold that one before it dropped. Yeah, that's it. I sold it two months back, before it dropped." <G> Of course this is jmho, and I'm sure others have their own opinions. Otoh, in a way I agree with you, oilbabe--- All stated opinions and claimed actions here are silently labeled 'Buyer Beware'. And sometimes I think each page here should have as a reminder a bottom border reading: "There's One Born Every Minute." regards, diana