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To: The Ox who wrote (56076)	12/5/1999 11:11:00 AM
From: Timelord	Respond to of 95453

Michael, Thanks for the sobering "shot across the bow". It was precisely that aura of irrational exuberance that cost many of us old timers dearly back in '97-'98. Regardless of what we know about missing barrels, production declines, growing supply/demand imbalances, what have you, the basic fact remains that the price is being manipulated by a consortium we barely understand, and certainly have no control over. Just look at what the words from one OPEC minister can do to the price of oil short term, and lets not forget that Iraq will start pumping oil again some day. Experience tells us that the reaction to the downside will eclipse the upside we've experienced, until the "spin" changes again... Alex

To: The Ox who wrote (56076)	12/5/1999 11:39:00 AM
From: BigBull	Read Replies (2) \| Respond to of 95453

Michael, Right you are. You have almost perfectly described the "Oil Cycle". But the oil cycle corresponds very much with the business cycle something your analyses leaves out. My view is that this business cycle will be larger and last longer than the one that was concluded by the Asia Apocalypse. It has been only ONE, 1, Uno, Ein, year since the Asian trough. Already, many Asian countries are at or beyond pre crises levels. I don't quite think people are realizing the speed and power with which oil demand is starting to surge. Virtually all the worlds economies are in their growth stages, some further along, some further behind, but growing none the less. Way back in March this board actually had a contest about how much OPEC would cut production. It was the opinion of many that OPEC HAD to cut. While Doug Fant did not "win" the contest he was close. He also opined that when the cuts were actually announced that OPEC "cut too much". I agree, OPEC now has room to move. When they do increase production, imo a lot of the Cheating talk will have ceased. Oh yes, there will be the occasional broken clock oil oil bear, screaming OPEC cheats. But by then most oil bears who put their money where their mouths where, will have been busted out. Also remember that, this OPEC crew is a far different kettle of fish than the last one. As Slider has indicated the mechanism of price bands is the likely vehicle for increasing production. I am not convinced that this will work, but if any crew can make it work, this OPEC crew can. When the economic cycle peaks in most nations so will the the price of oil. My work tells me that this will not occur for at least 5 years. So far, I've been right about Asia, and see no reason to change my views. Whether oil trades in range or continue upward to the Wolanchuckian $40 does not really concern me. I'll take oil oscillating ~ 25 for the next 5 years. At this point I am ceasing all short term trading in OS stocks. I intednd to ride the next wave for all it's worth. Consider me an old guy surfer. I am content to "soul surf" with my old long board far from the madding crowd. The guys and gals with short boards are all very much part of the sport. I love to watch their spectacular moves and wonder at their skill. The surf is building on the North Shore, brother, how you ride is your business. Me? I'm waiting for the 40 ft monster. Oooooo Yeeeeaahh. JMVVHO "In God's Hands" Bull

To: The Ox who wrote (56076)	12/5/1999 12:17:00 PM
From: stsimon	Respond to of 95453

The strong yen makes oil cheaper in Japan and helps other Asian economies as well. As long as the world economy continues to improve oil and other commodities should do well. OPEC would be foolish to let oil sustain a $30 price, but a spike to that level could occur on weather or some other event. The sector is always volatile, but until I see the public embracing 50MPG cars instead of those SUVs, its hard not to be long term positive.

To: The Ox who wrote (56076)	12/5/1999 5:49:00 PM
From: Gameboy	Respond to of 95453

Michael, even at $25/barrel, non-OPEC supply is no threat to the profits that OPEC will realize from $25/barrel oil. eia.doe.gov excerpt: The high non-OPEC supply case assumptions result in 1.5-percent annual growth in non-OPEC production over the forecast period, as compared with a 1.1-percent growth rate in the reference case. Non-OPEC oil production reaches a peak of 62.1 million barrels per day in the high case in 2020, compared with a peak of 56.3 million barrels per day in the reference case. A difference of 5.8 million barrels per day. another excerpt: The forecasts that provide projections through 2020 (IEO99, DRI, BTA, and IEA) expect OPEC to provide an increment of between 20 and 30 million barrels per day between 1996 and 2020. The difference between the high non-OPEC and the low non-OPEC supply cases is based upon the price of oil (established by OPEC). Assuming $25/barrel represents the high non-OPEC supply case, OPEC would realize (26+20) mbd x $25/barrel = $1150 million/day in the high non-OPEC supply case. Assuming $20/barrel represents the low non-OPEC supply case, OPEC would realize (26+25.8) mbd x $20/barrel = $1036 million/day in the low non-OPEC supply case. At $25/barrel OPEC would realize $114 million/day more in twenty years than at $20/barrel (and OPEC's net profit would be even greater). By the way, the DOE analysis seems to disregard the participation of Mexico and Norway which represents production equivalent to about 20% of that of OPEC and greatly strengthens OPEC's hand. OPEC was "fooled" in December of 1997 into over-production. OPEC won't be fooled so easily the next time. The main constraint on OPEC's not overplaying their hand would be political considerations.