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

To: stevedhu who wrote (60140)	2/11/2000 9:11:00 AM
From: monu	Read Replies (1) \| Respond to of 95453

It looks like some people are getting nervous. Friday February 11, 6:09 am Eastern Time FOCUS-Oil inventories slump, crude hits new highs By Richard Mably LONDON, Feb 11 (Reuters) - World oil inventories were drained sharply at the end of last year and stocks now are being depleted even faster by producers' supply curbs, the International Energy Agency said on Friday. Petroleum inventories held in the Organisation for Economic Cooperation and Development (OECD) countries were reduced by 2.7 million barrels a day in December, the largest draw since February 1994, the IEA said in its monthly Oil Market Report. ``Operating minima could soon be reached, triggering a worldwide scramble to find oil,' said the agency, the West's energy watchdog. Lowly inventories pushed crude prices on Friday to a nine-year high of $27.85 for North Sea Brent. In the northeast United States shortages have raised the retail price of home heating oil to $2.50 a gallon from $1 a gallon. The price highs are a result of output restrictions by producers led by OPEC who are due in March to review an agreement keeping some four million bpd from the 75 million bpd world market. OECD commercial stocks were drawn by 1.7 million bpd on average in the fourth quarter to 2.528 billion barrels, lower than at the end of 1996 when a harsh winter and company cost-cutting hit inventories. IEA SEES LOW STOCKS GETTING LOWER ``Without more oil from producers who are limiting output, the first quarter stockdraw will be even larger, increasing the risks of spot outages,' the IEA said. ``We're expecting a draw in the order of 2.7 million bpd in the first quarter,' said David Knapp, head of the IEA's oil markets division. IEA calculations show that OPEC would need to raise supply by 2.4 million bpd for the rest of the year, to an average 28.6 million bpd, just to keep the market balanced at current low inventory levels. The cartel pumped only 26.2 million bpd in January keeping it 76 percent compliant with the output cuts it targeted last March. World oil demand next year is forecast by the IEA rising 2.8 million bpd to 77 million while non-OPEC supply should go up just 1.1 million bpd to 45.6 million. The IEA now is worried that without fresh OPEC supplies gasoline prices in the West will be sent soaring this spring. ``We are getting increasingly concerned about the level of gasoline supply and the decline in refinery output,' said the IEA's Knapp. ``Measured in days of forward demand, gasoline stocks in the U.S. and in Europe are approaching unprecedentedly low levels,' the agency said. Speculators have pushed crude prices so high that refinery profit margins have been dented, forcing refiners to cut back operating levels. The IEA estimated that December OECD refinery throughput slipped by 4.6 percent of full capacity to 89 percent, despite increased demand for petroleum products.