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

To: Roebear who wrote (54966)	11/17/1999 10:49:00 PM
From: Tomas	Respond to of 95453

Matt Simmons: "I think you would see a terrific spike in oil service stock price prices" Raising The Specter Of An Oil Shortage By Kenneth N. Gilpin published October 31 in The New York Times Just about a year ago, some analysts were saying oil prices could fall to $5 a barrel by year-end. Oil company executives told Congress that prices would linger around $10 a barrel for the next decade. That was then. Now, thanks to rising demand and discipline on the part of the Organization of Petroleum Exporting Countries, Mexico and Norway, prices are north of $21 a barrel, double what they were last fall. Inventories are lean and winter is coming. Instead of $5, the talk is that by year-end prices could be around $30 a barrel, maybe higher. And some people have started to whisper about gasoline lines by spring. Matthew R. Simmons, president of Simmons & Company International, a Houston-based energy investment bank, is one of those people. Only he's not whispering. He took some time last week to discuss what he worries may happen over the next six months. Following are excerpts from the conversation: Q. For the last four or five years you have been talking about the potential for an increase in oil prices. We've had a spike this year, but you are still worried. Why? A. I started getting worried about our vulnerability to an imbalance between supply and demand about four or five years ago, but I have never been as concerned as I am right now. Unless certain things happen, demand will outrace supply. Q. What are the supply and demand numbers for oil? A. The International Energy Agency estimates that in the fourth quarter worldwide demand for oil will be 77.2 million barrels a day, rising to 78.3 million barrels a day in the first quarter. On the supply side, non-OPEC production, including natural gas liquids, is estimated at just over 48 million barrels a day in the fourth quarter, and will only inch up slightly from that level in the first quarter. OPEC is producing just over 26 million barrels a day. The official thought is that there are enough inventories to cover this shortfall. As of the end of August, the I.E.A. estimated total Organization for Economic Cooperation and Development inventories were 2.69 billion barrels, and said stocks will be drawn down by 1.2 million barrels per day in the third quarter. Now, the single biggest lack of knowledge in the petroleum industry has to do with stocks. Most of them are not usable. And the I.E.A. estimates on non-OPEC production, which assumes a 1.4-million-barrel-a-day increase between the second quarter of 1999 and the first quarter of 2000, are a joke, because nothing has been started yet on new oil projects. Last week, five of the major oil companies reported their third-quarter results. On average, daily production at those companies was down 2.5 percent compared to a year ago. If it turns out non-OPEC supply is flat rather, then you have to add another 1 million barrels a day to the draw on stocks. Q. So what happens if your predictions about a shortage are right? A. If OPEC sticks to its production quotas, which I think they will, and the winter is not as mild as the last couple have been, I am worried about a physical shortage that creates a violent price rise. In my view, most of our petroleum stocks are at the low end of anything we have operated with. Q. How big a price increase could we see? A. I am probably the only person in the oil industry who has never given a price forecast. But letting demand get ahead of supply terrifies me. If that happens you could get a price increase of at least $5 to $10 a barrel. A big price increase unleashes all sorts of bad things . . . I think there are gasoline lines in our future, and Americans don't like gasoline lines. I don't know how we would handle gasoline lines now, because we don't have attendants at gasoline stations now, as we did in the 1970's. Q. Since there are always stock drawdowns in the fourth and first quarters, if this jump doesn't occur in the next six months, will it not happen? A. If it hasn't shown up by the end of March, it won't show up. And the pressure for a price jump will start to get significant by mid-November, when peak demand starts to kick in. Q. From an investor's perspective, who are the big winners if your scenario plays out? A. I think you would see a terrific spike in oil service stock price prices, companies like Schlumberger, Halliburton and Baker Hughes. But with the run-up in oil prices into the $20-a-barrel range, they are going to do well next year anyway. Clearly, profitability of all oil and gas companies will be helped by this, but the top 10 to 15 independent oil producers and the bottom 3 major oil companies will also be star performers. We happen to need a lot more supply, and that means more exploration. But many of these companies have downsized and it will take time to gear up again.

To: Roebear who wrote (54966)	11/17/1999 10:57:00 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 95453

Roebear: OT Gold looks weak for the short-term. Gold stocks acting very badly relative to bullion -- always a bad sign. I suspect we may see a sharp drop after the next BOE auction. Also gold never does well when the paper markets are in a roaring bull phase as they are right now. But looking beyond the next month or so the outlook seems much brighter. Soaring oil prices preceeded gold's big jump last fall and black gold is exploding again as all on this thread are well aware. Also I expect the current market rally to peter out by January, removing a big obstacle to another gold jump. OSX profits invested in gold stocks near the probable December bottom could yield very large returns by next spring.

To: Roebear who wrote (54966)	11/18/1999 6:40:00 AM
From: oilbabe	Respond to of 95453

Oil unions to notify Labor Ministry over strike action Oil industry unions at loggerheads with employer Petr¢leos de Venezuela (PDVSA) will present a notice to strike tomorrow as they intensify their campaign to either get what they want in collective contract negotiations or go on indefinite strike. Once the notice to strike has been handed in to the Labor Ministry, the three unions ? Fedepetrol, Fetrahidrocarburos and Sintraip ? will then have 120 hours under the law to continue discussions before being allowed to strike. If no agreement is reached and a strike goes ahead, an estimated 45,000 oil-industry employees will cease work. Once the unions are in a legal position to strike, there is still a possibility that talks would continue before an actual strike is called.

To: Roebear who wrote (54966)	11/18/1999 6:48:00 AM
From: oilbabe	Read Replies (1) \| Respond to of 95453

Record Number of Travelers on Road for Thanksgiving, AAA Says Orlando, Florida, Nov. 17 (Bloomberg) -- A record number of U.S. travelers will be on the road this Thanksgiving, crowding highways even with gasoline prices up 22 percent from last year, the American Automobile Association said. A projected 33.8 million Americans plan to travel 100 miles or more during the holiday weekend, up 200,000 from last year, the AAA said. Nearly 28 million of them will be driving in cars, pickups or recreational vehicles. The highways will be crowded after a rally in oil markets sent nationwide pump prices to an average $1.282 a gallon this month, up 22.8 cents from last November, the AAA said in a separate report yesterday. For John Corlett, of Sea Cliff, New York, that means he'll spend another $3 or $4 to see his father this Thanksgiving in Syracuse, about five hours away in his 30-mile-a-gallon Honda Accord. ``That's a couple cups of coffee at Starbucks; maybe it's only one cup,' said the 32-year-old Corlett, a lobbyist for the AAA in New York. He will leave about 8 a.m. on Thanksgiving morning with his wife, Christine, and a black Labrador named Raider. Crude oil prices have more than doubled this year, trading today above $26 a barrel for the first time since January 1997. Prices rose because of producing nations' output cuts that equal about 7 percent of world supply. The rally pulled gasoline futures, representing wholesale prices, to 73.40 a gallon, a 3 1/2-year high on the New York Mercantile Exchange. Retail gasoline was most expensive in the West, at $1.398 a gallon, and least expensive in the Southeast, at $1.196 a gallon, according to the AAA's monthly Fuel Gauge Report, which was based on 60,000 credit card transactions over the past weekend. The Southeast also was the region with the largest portion of the nation's travelers. Almost 7 million people are expected on the road in the region, or 11 percent of the population there. Higher gasoline prices probably won't deter anyone from driving during the holidays, Corlett said. ``I guess if I saw gasoline at $1.70, I might say, `Wow,' he said. ``But it's the holidays. I think maybe it would take another $1 before I would think twice.'