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

To: Terry D who wrote (58281)	1/11/2000 7:02:00 PM
From: oilbabe	Read Replies (1) \| Respond to of 95453

New York, Jan. 11 (Bloomberg) -- The following is a summary of -- and reaction to -- the American Petroleum Institute's weekly report on U.S. oil inventories and production. Market Reaction Substantial. U.S. inventories of crude oil, gasoline and distillate fuels all rose last week, the API said. The increases were larger than analysts surveyed by Bloomberg News had expected, though the weekly changes all included revisions to the previous week's totals. Oil futures fell in electronic trading on the New York Mercantile Exchange after the report was released. Crude oil for February delivery recently was 27 cents lower at $25.50 a barrel, February heating oil was down 0.85 cent at 65.90 cents a gallon and February gasoline was 0.97 cent lower at 67.75 cents a gallon. Behind the Numbers U.S. crude oil supplies increased 1.71 million barrels during the week ended Jan. 7 to 294.81 million barrels, rising from the lowest level since January 1997, the API report said. Analysts surveyed by Bloomberg News had expected increases ranging from 500,000 barrels to 1.4 million barrels, on average. The API raised its estimate of inventories for the prior week, ended Dec. 31, by 763,000 barrels to 293.10 million barrels. Without that revision, the week-on-week change would have been a 2.47 million-barrel increase. Gasoline inventories rose 4.08 million barrels to 194.60 million barrels, more than an expected increase of between 1 million barrels and 1.8 million barrels. Implied demand for gasoline fell 11 percent to 8.06 million barrels a day, according to figures derived from the API report. Inventories of distillate fuel, including diesel and heating oil, rose 2.40 million barrels to 126.65 million, versus an expected increase of between 500,000 barrels and 1.3 million barrels. Refinery utilization slumped 3.9 percentage points to 85.8 percent of normal capacity, the lowest rate since March 1993. A narrow difference between the cost of crude oil and prices earned for selling refined products has squeezed profit margins for refiners, persuading some of them to reduce processing rates. Unexpected operational problems have also forced some refinery units to close. What Analysts Say ``Demand for gasoline just collapsed. That's the most bearish of these numbers,' said Tom Blakeslee, an oil and gas trader at Eildon Marketing LLC in White Marsh, Maryland. Noting that refinery operations were low, Blakeslee said, ``I assume that's because of all the refinery problems recently. I guess the mishaps were larger than we thought.' Market Trend Crude oil prices more than doubled last year, and peaked at a nine-year high of $27.15 a barrel in November, spurred by oil production cutbacks from the Organization of Petroleum Exporting Countries and other producers. Some OPEC members have said they want current production levels to stay in place for a further three months after their scheduled March 31 expiration, which would help bolster prices and stop inventories from ballooning after the peak winter demand period in the Northern Hemisphere ends.

To: Terry D who wrote (58281)	1/11/2000 7:04:00 PM
From: oilbabe	Read Replies (2) \| Respond to of 95453

1/11 16:31 Natural Gas Industry Sees Strong Demand Through 2015 By Liz Skinner Washington, Jan. 11 (Bloomberg) -- U.S. demand for natural gas is expected to grow by 2.6 percent a year during the next 15 years, largely because of growing electricity generation needs, an industry group said. The natural gas share of total U.S. energy consumption also will rise during that period, to more than 28 percent of the energy mix by 2015, up 5 percentage points from 1998, according to an annual study by the Gas Research Institute, a nonprofit industry research group. Gas supply increasingly will rely on more production from the deeper waters of the Gulf of Mexico and increased Canadian imports, the authors of the report said today in Washington. ``These two sources will become the pillars of supply necessary to meet growing gas demand,' said Paul Holtberg, a GRI group manager who worked on the study. Other energy sources in the mix include petroleum, which the study said will fall 2 percentage points to 37 percent in 2015; coal, predicted to drop 1 point to 22 percent; nuclear, to drop 3 points to 5 percent; and renewable energy sources, which are expected to increase 1 percentage point to 8 percent of energy consumption, the report said. Holtberg said gas prices will have to be competitive to meet these growth projections. He said he expects gas prices to remain relatively high through 2000, because the 1998 oil price collapse discouraged new exploration for gas. He said higher oil and gas prices in 1999 and 2000 will accelerate drilling activity. Natural gas futures are up 4 percent this week on expectations that cooler weather forecast for the U.S. Northeast next week could boost demand for the No. 1 U.S. home-heating fuel. Still, prices are down about 10 percent in the past month because high temperatures have reduced demand. Electric Power The greatest potential for gas growth is electric power generation, which will account for about 50 percent of the total growth in gas demand from 1998 to 2015, the report said. Industrial non-electric power generation applications represent the second-greatest potential for growth for gas, according to GRI. ``Natural gas utilities are increasingly interested in distributed generation, where they generate electricity at the site of its use,' said Peggy Laramie, spokeswoman for the American Gas Association, which represents local natural gas utilities. ``It's popular for industrial customers, increasingly popular for commercial customers and will be used for homes before too long.' Risky Holtberg said the gas industry's increased reliance on electricity generation as the basis for demand growth is risky because of the changing operation and structure of the electric industry. It is being transformed from an industry dominated by regulated utilities to one of decentralized, unregulated power generators. Gas companies will need to make significant investments in storage and pipeline capacity and revise standard gas industry operational practices to reduce the risk, Holtberg said. ``Improvements in technology will play a pivotal role in helping gas producers meet the projected demand,' he said. The GRI report estimates total U.S. energy consumption will grow by an average 1.3 percent a year for the next 15 years.