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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Dave Fong who wrote (6961)	11/18/1999 2:55:00 AM
From: Richard Saunders	Respond to of 24920

Nov. 17 oil inventory data sniped from Dismal Digest site. The latest U.S. inventory data released by the API and the EIA are bullish for oil prices, which closed at $25.70 per barrel yesterday, the highest level since January 1997. A very large, unexpected decline in gasoline stocks will provide a further boost to prices. The price of West Texas Intermediate should easily top $26 per barrel today. The API and EIA reports are conflicting with respect to crude inventories for the week ending November 12. According to the API, crude inventories declined by nearly 2.5 million barrels from the previous week, while the EIA reported a 1.8 million-barrel increase. Markets had anticipated an inventory reduction of one million barrels, according to a Reuters survey. Both the API and EIA reports show an unexpectedly large decline in gasoline inventories last week. According to the API, gasoline inventories fell by nearly five million barrels. The EIA reported a decline of four million barrels. According to a Reuters survey, markets had anticipated a stock build of 375,000 barrels. The reductions in distillate inventories reported by API and EIA are roughly in line with expectations. The API reported an inventory decline of 932,000 barrels, while the EIA reported a decline of 2 million barrels. Markets had anticipated an inventory reduction of 1.75 million barrels, according to a Reuters survey. Analysis After trading above $23 per barrel for more than a week, oil prices are headed upwards once again. The price of West Texas Intermediate surged to $25.70 per barrel yesterday, its highest level since in 34 months. The increase is due to a number of factors. Most importantly, markets are focused on falling global crude oil stocks. OPEC cutbacks are finally having an impact on inventory levels. Global demand remains high as Asia continues to recover and the winter heating season in North America has officially begun. According to the Energy Information Administration, U.S. demand for petroleum products reached 19.8 million barrels per day in October, the second highest level for any month this decade. Markets are also watching closely today's meeting between Saudi Arabia, Mexico and Venezuela, the architects of the latest OPEC production cutbacks. This group has strongly asserted that the current cutback agreement, which took nearly 5 million barrels of oil off the market per day, will remain in place through March 2000. They are also leaning towards extending the cutbacks further into next year. Given the importance on crude oil stocks, markets will look to the latest inventory numbers for the U.S., as reported by the API and EIA, to provide near-term direction for oil prices. The API and EIA inventory reports for crude oil showed inventories moving in opposite directions during the week of November 12. The API reported nearly a 2.5 million-barrel decline in crude stocks, the first decline in a month, while the EIA reported a 1.8 million barrel stock build. Markets had anticipated a one million-barrel reduction in inventories as fall refinery turnarounds are mostly completed. This is evidenced by the fact that refinery utilization rates are once again above 90%. The mixed results for crude oil stocks will be largely overshadowed by the continued decline in gasoline inventories. Gasoline inventories declined for the fifth straight week, as demand remains significantly stronger than normal for this time of year. According to the API, gasoline inventories declined by more than 4.9 million barrels last week, while the EIA reported a four million-barrel decline. Markets had anticipated a build of 375,000 barrels. Distillate fuel oil inventories for the week ending November 12 were down 932,000 barrels according to the API, and down two million barrels according to the EIA. Markets had anticipated a decline of 1.75 million barrels, according to a Reuters survey. Nevertheless, distillate inventories still remain well above normal for this time of year and began the winter heating season only slightly below last years very high levels. Forecasts of a much colder winter than that experienced during the past two years will raise concerns of significant inventory draws as the heating season progresses, perhaps to their lowest levels since the winter of 1996-1997. As a result of the latest inventory numbers by the API and the EIA, the price of West Texas Intermediate should easily surpass $26 per barrel today. The price of oil in the weeks to come will be largely driven by weather in North America and compliance by OPEC members with the cutback agreement. If very cold weather sets in and OPEC compliance remains high, crude oil prices could approach $30 per barrel by early next year.