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

To: Aquaman who wrote (204)	3/29/2000 7:07:00 PM
From: Ed Ajootian	Read Replies (1) \| Respond to of 350

What Does the OPEC Announcement Really Mean? Obviously, the big news today is OPEC?s agreement to raise crude production by 1.45 million barrels a day. World benchmark Brent blend crude oil fell below the key $25 level on Wednesday after the OPEC members agreed to reverse cuts they implemented a year ago to boost global prices. dailynews.yahoo.com. The question is how low prices will go. The stated goal is in the low to mid $20?s for North Sea Brent (West Texas Intermediate usually sells for about $2.00 more). Some groups wanted more. The International Energy Agency, the West?s energy watchdog, said on Wednesday OPEC?s decision to raise crude oil production by 1.45 million barrels per day was a ?step in the right direction? although it would not fully meet increased demand later in the year biz.yahoo.com. The key to the decision was Iran?s agreement to the plan. Denouncing U.S. pressure but fearing loss of market share, Iran announced today it would increase oil production after initially refusing to accept an agreement signed by nine other OPEC members to boost the world?s crude supplies biz.yahoo.com. However, the real news is what didn?t happen. .......In a rare departure from its normal quest for unanimity, ministers of the 11-nation cartel announced Wednesday morning that only nine members would raise production. That appears to be well short of what analysts have said would be needed to curb crude oil prices that have tripled over the past 12 months. The Clinton administration had been lobbying for a rise of 2 million to 2.5 million barrels a day to bring down gasoline prices that in the United States have risen from below $1 a gallon just over a year ago to an average of almost $1.60. Energy Secretary Bill Richardson was unsuccessful in his arm-twisting and summer gasoline prices may remain high because of extremely low gasoline stocks. Refiners may not be able to build up inventories in time for the high-demand summer driving season, energy analysts have said. .......The agreement also excludes Iraq, which never was part of the original production cuts last year that sent prices surging. OPEC pumps more than 26 million barrels of crude each day, or about 35 percent of the world?s supply. Key non-OPEC producers, such as Mexico and Norway, have said they were watching to see what OPEC would do before adjusting their own output. .......In trading before the meeting broke up, contracts for May delivery of West Texas Intermediate crude fell 70 cents a barrel to close Tuesday at $27.09 on the New York Mercantile Exchange. In London, North Sea Brent was 17 cents lower at $25.51 on the International Petroleum Exchange. But in after-hours trading, prices started edging higher. .......Industry sources had estimated that OPEC members were already producing at some 1.2 million bpd above their official quotas. ?How much they cheat will be depend on prices going up or down in the coming weeks. At the current level, you are not going to see a huge buildup in world stocks,? one U.S. oil trader said. .......The net increase is estimated to be only about a million barrels a day. The rest of the 1.45 million will simple be black market barrels now legal barrels. ******************************************************* Above is from today's Petrodispatch put out by Steve King. God I love this industry!