Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Ken Robbins who wrote (52766)	10/11/1999 9:05:00 AM
From: Wowzer	Read Replies (1) \| Respond to of 95453

WSJ Rise in OPEC Output Is Blamed For Decline in Crude-Oil Price By PETER A. MCKAY Staff Reporter of THE WALL STREET JOURNAL Traders surprised by plummeting crude-oil prices last week had to look no further for an explanation than the cartel that had boosted prices months before. After surveys last week showed that the Organization of Petroleum Exporting Countries may soon increase production, oil prices gradually fell on each trading day -- an uncharacteristic drop for a resource whose price had been rallying since early this year. Now, even with the U.S. winter-heating season approaching, some analysts say crude may be poised to lead energy prices lower. Others, still dumbstruck by the energy complex's beating last week, are hesitant to become bearish. For both sides, however, last week was a stark reminder of the massive influence that a handful of OPEC officials can wield over energy prices, regardless of how much or how little oil consumers are actually using. "This is shattering the market," said analyst Scott Meyers of Pioneer Futures Inc. in New York. "What you're looking at now is a market that's come apart at the seams." Front-month crude-oil futures last week fell $3.64 to $20.90 a barrel on the New York Mercantile Exchange, the contracts' lowest close since Aug. 25. The decline was a sharp turnaround for a commodity that had rallied steadily since February from lows below $12 a barrel. Traders and analysts had long credited OPEC's compliance with its recently promised production for creating the run-up. Those commitments seemingly began to unravel last week. A Dow Jones Newswires survey showed the combined daily production of the 10 OPEC members that agreed to production cuts had risen 101,000 barrels to 23.66 million barrels last month, putting the group's compliance rate at 84.08%, down from 86.42% in August. In addition, non-OPEC member Norway said Friday that it wants to increase oil production by 20% in 2000. Although surprised by the size of the move, some analysts said the temptation for nations to increase production to cash in, particularly at prices above $22, isn't unusual. "Everyone's always skeptical about OPEC's ability to hold the line," said Derek van Eck, president of the New York investment firm Van Eck Global. "Overall, oil has led the commodity move up lately, and for today at least, it led the move down." Heating oil, which closed 8.77 cents lower at 53.72 cents a gallon, and gasoline, which fell 9.89 cents to 59.15 cents a gallon, also declined every day last week. In large part, those products followed crude oil on its ascent in recent months, but that may not necessarily continue if crude continues down, said John Kilduff, senior vice president for energy risk management at Fimat USA Inc. In particular, analysts said heating oil prices are likely to increase as winter demand picks up. However, the picture isn't as clear for crude oil. "A market that had everything going for it suddenly had nothing going for it," Mr. Kilduff said Friday. President Clinton said Friday he would consider selling oil from the U.S. strategic petroleum reserve to moderate oil prices as winter approaches. He said that he is concerned about higher heating-oil prices affecting consumers in the Northeast, but that he hadn't reached a decision.