goldsnow:" tick,tick,tick; can you hear inflation time bomb ticking?
Inflation,Part I
November 18, 1999
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ÿÿÿÿÿ Commodities
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Crude-Oil Futures Rise,ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Hitting Nine-Year High
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ By PETER A. MCKAYÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Staff Reporter of THE WALL STREET JOURNAL
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ (See Corrections and Amplifications item below)
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Crude-oil futures, building on one of the strongest rallies
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ in years, hit a nearly nine-year high Wednesday. And the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ impact could be felt at the pumps in coming weeks.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The latest jump in crude futures came as investors have
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ become convinced that the Organization of Petroleum
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Exporting Countries is actually sticking to its promised
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ production cuts. Wednesday, crude-oil prices reached
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ their highest level since the Gulf War broke out in
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ January 1991, closing at $26.60 a barrel, up 90 cents, on
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the New York Mercantile Exchange. That is up from less
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ than $13 a barrel a year ago.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Analysts and traders said strong U.S. demand andÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ worries over inflation and delivery at the turn of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the year have also contributed to oil's recent run-up,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ which has totaled $1.69 a barrel already this week.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ However, traders said that OPEC's compliance with
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 80% to 90% accuracy in recent months to its promises to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ limit production to about 26 million barrels a day have
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ provided the foundation of the continued strong crude
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ prices. Traditionally, the cartel's members begin to cash
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ in once prices begin to increase.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ After Wednesday's rally, analysts projected that prices
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ would remain high for some time. Some traders were
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ predicting $30 oil. For consumers, the price increases in
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the futures markets could affect the price of retail
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ gasoline -- and other consumer goods, due to higher fuel
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ costs -- through the summer.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "I think that [OPEC] was so concerned early in the year
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ about single-digit oil prices that they were very anxious
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to comply with a game plan to increase their revenues,"
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ said independent energy analyst Jim Ritterbusch. "As a
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ result, they surprised themselves with the success of the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ program, and they still don't want to rock that boat."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The market received more price-supportive OPEC news
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Wednesday, when Venezuela's foreign ministry
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ announced the cartel would postpone its 40th
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ anniversary summit from March 2000 to at least
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ September, a move that also decreases the likelihood of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ production increases before the meeting. Adding to the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ bullish trend, the American Petroleum Institute's latest
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ inventory data, released Tuesday evening, showed
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ across-the-board declines in crude oil, gasoline and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ heating-oil inventories in the week ended Friday. The
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ API showed a nearly five-million-barrel drop in U.S.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ gasoline stockpiles at refineries to an extremely tight
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 189.464 million barrels at a time when inventories
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ should be increasing, said John Kilduff, senior vice
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ president for energy research for Fimat USA, a New
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ York futures brokerage firm.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ After Wednesday's rally, consumers would see a
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ one-cent boost in retail gasoline prices for each 42-cent
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ increase in crude futures, estimated Mr. Kilduff. That
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ would translate into a four-cent-per-gallon gasoline
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ increase within the next three weeks, just due to this
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ week's crude-oil increase. Nationwide, the average
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ retail price for a gallon of regular grade gasoline is now
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ $1.2525, up 22.52 cents from a year ago, said Trilby
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Lundberg, publisher of the Lundberg Survey energy
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ newsletter.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "It's looking like this move
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ could be somewhat
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ sustainable," said Mr.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Kilduff, adding that higher
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ crude costs could translate
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ into fuel surcharges on
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ plane tickets or higher
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ prices on "almost any
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ product that's shipped."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ At the Nymex this week,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ most of the selling has been
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ done by commodity funds
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ and speculators who want to take profits on bets they
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ had already placed for higher crude oil prices. That
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ would mean the market is poised to go even higher as
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ participants who are already "long" simply increase the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ size of their positions, one trader said.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "I did not see an anxious market today," he said. "It was
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ a steady market with a lot of room to the upside."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Crude prices were also buoyed by the inability of Shell
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Petroleum Development Corp. to deliver from one of its
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ oilfields in Nigeria this week, due to civil unrest in the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ region. In the gasoline market, prices were further
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ boosted this week by Hurricane Lenny, whose approach
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to the U.S. Virgin Islands shut down the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 525,000-barrel-a-day refining joint venture between
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Amerada Hess Corp. and Petroleos de Venezuela on St.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Croix.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Those factors, combined with a "very different OPEC
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ than we've seen in 20 or 30 years," left Derek van Eck,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ president of the New York investment firm Van Eck
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Global, gushing yesterday. Just a few months ago he had
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ said oil would have a problem remaining above $22.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "We're just getting some major surprises all at once,"
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ said Mr. van Eck.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ In other commodity trading:
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ WHEAT: Nearby futures prices slipped at the Chicago
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Board of Trade as traders focused on forecasts for rain
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ in the U.S. Great Plains. Spot December futures fell five
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ cents to $2.4575 a bushel, not far off the contract's
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ lifetime low. The winter wheat crop has experienced
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ severe dryness so far this fall, but there is hope that rain
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ in coming weeks can alleviate damage to developing
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ plants.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ SUGAR: World raw sugar lost 5% of its value at the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Coffee, Sugar and Cocoa Exchange division of the New
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ York Board of Trade as speculative commodity funds
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ became heavy liquidators. Nearby March futures fell
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 0.33 cent to 6.23 cents a pound. Funds were said to have
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ sold a minimum of 15,000 lots. The down move broke
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ sugar out of its three-month trading range, and traders
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ expect prices to fall back toward six cents.
ÿÿÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ CRUDE-OIL FUTURES closed in New York on Jan. 8,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 1997, at $26.62 a barrel, the highest close since January
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 1991, which means that Wednesday's close of $26.00
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ was three cents away from overtaking that mark. The
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ article above incorrectly indicated that the Wednesday
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ close was the highest since January 1991.
To: Richard Harmon who wrote (45134)
ÿÿÿÿ From: goldsnow
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Thursday, Nov 18 1999 8:35AM ET
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Reply # 45136 of 45182
ÿÿÿÿ 11/18 7:01 Crude Oil Falls on U.S. Proposal to Allow the Sale of Strategic Reserves
ÿÿÿÿ By Julie Crust and Dudley White
ÿÿÿÿ Crude Oil Falls After U.S. Mulls Selling Supplies From Reservesÿ
ÿÿÿÿ London, Nov. 18 (Bloomberg) -- Crude oil fell after the U.S.
ÿÿÿÿ introduced legislation to allow the sale of supplies from its
ÿÿÿÿ emergency reserve in an effort to stall a rise in gasoline and
ÿÿÿÿ heating fuel prices.ÿ
ÿÿÿÿ Two U.S. senators yesterday introduced a proposal that would
ÿÿÿÿ authorize the sale of oil held underground, inventories that are
ÿÿÿÿ enough to meet two months of the nation's imports. The threat of
ÿÿÿÿ a sale, even of a minimal amount, signals growing concern that
ÿÿÿÿ oil prices have risen too much, traders said.ÿ
ÿÿÿÿ quote.bloomberg.com; |
