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

To: Tomas who wrote (63601)	3/31/2000 5:58:00 PM
From: jim_p	Respond to of 95453

I only need it to last until August, then I'm headed for a small island somewhere.

To: Tomas who wrote (63601)	3/31/2000 6:11:00 PM
From: Tomas	Read Replies (1) \| Respond to of 95453

OPEC's new target prices: $22-28 for the OPEC basket = $24-30 for WTI. Venezuelan Oil Minister Ali Rodriguez, who is the new president of OPEC, said Friday that the cartel plans to maintain a price range of $22 a barrel to $28 a barrel for the OPEC basket of crudes. Rodriguez said that if the basket price moves outside the target range for 20 consecutive days, OPEC will increase or decrease production by 500,000 barrels a day until the price moves back within the stipulated band.

To: Tomas who wrote (63601)	4/1/2000 10:13:00 AM
From: Tomas	Respond to of 95453

Traders question OPEC bid to control prices - Markets in London, New York will still play key role Calgary Herald, April 1 Stephen Ewart, with files from Chris Varcoe In the pit where traders furiously buy and sell the benchmark Brent crude contract, they're not overly concerned that Big Brother, in the form of OPEC, is hanging on every word and watching every hand signal that moves the price of oil. It is emerging in the wake of this week's stormy gathering of the Organization of Petroleum Exporting Countries that the cartel wasn't content to simply boost production by 1.45 million barrels of oil a day to stabilize prices. It intends to actively manage prices. OPEC members arriving home from Vienna have said they are "very serious" about keeping the Brent price within an unpublished range and will move quickly and quietly to alter their production to ensure that happens. "I have the power now to send instructions to each country, 'Cut or increase production,' ' said new OPEC president Ali Rodriguez of Venezuela. There is uncertainty about width of this price band although Saudi Arabia, which is the biggest producer in OPEC and the most influential member, has said the range is between $20 US and $25 per barrel. There was no mention of OPEC's unprecedented move to manage the market in the official statement after the meeting, the formula includes price points which will trigger a telephone call and production instructions from the president. That's how it will work, in theory. Given OPEC's history of dissension and cheating there is no shortage of doubters. Stephen Gutteridge is one of them. He began trading the Brent crude futures contract when it was established in 1981. At that time, the oil world was exposed to the wild price swings of the OPEC era and, to add a measure of predictability, the International Petroleum Exchange was created to allow companies to lock in a price of future production. A few years later, an even bigger futures contract would emerge on the New York Mercantile Exchange. It was the rise of futures trading that spelled the end to OPEC's direct control over oil pricing. "Whenever they've tried to control price within a narrow range, there's always been something that caused the price to eventually break out," said Gutteridge, now a senior executive at the IPE. "There are just too many factors that can influence events and will move oil out of that range." The world has seen the extent of that range over the past 16 months when crude traded below $11 a barrel and recently above $34 as the glut in supply quickly turned to a shortage. It was those big gyrations that prompted OPEC, which pumps two of every five barrels of oil in the world, to increase quotas by six per cent. On Friday, Brent settled at $24.77 a barrel on the IPE while NYMEX closed at $26.90. Others say OPEC may have just found a formula that works. Ken Miller, senior principal with energy consultants Purvin & Gertz Inc. in Houston, admitted OPEC's move caught industry analysts by surprise but he supports the concept. The problem for OPEC in the past was it made changes using dated supply-demand data and then set quotas for up to a year. "Instead of having a move once every six months or a year that tends to be over-reactive and improperly engineered, they've come up with a mechanism to do it a little more often and a little bit more automatically," Miller said. He cautioned, however, that "the plans have to be laid out carefully." So far there even appears confusion about the formula among OPEC members. Saudi Oil Minister Ali al-Naimi has put the price range at $20 to $25 a barrel while Rodriguez said the range was $22 and $28, as did Algeria, while Indonesian officials said it was between $22 and $27. There was also confusion whether the price was for Brent or the slightly discounted OPEC basket of crudes. Add into the unsettled scene that Iran stormed out of the OPEC meeting without signing the new production quotas even though it intends to add more production. Then, there is Iraq, which is outside any quota decisions of the 11-member group because it remains under UN sanctions from the Gulf War. There are certainly issues over quota compliance. Julian Lee, senior energy analyst at the Centre for Global Energy Studies in London, cautioned that the key to success, as always, is that the cartel members must be disciplined and follow the president's orders. "I don't think they'll be able to control members any more successfully with a phone call than they had with ministerial meetings," said Lee, whose consultancy is headed by former Saudi oil minister Sheik Zaki Yamani. Al-Naimi made public assurances that OPEC won't be "trigger happy" in defending the price range but will move if prices remain outside the range for at least three weeks. Regardless of which price range is accurate, it moves oil out of the $18-to-$20 trading range widely cited as normal before this OPEC meeting. Lee has serious doubts that OPEC can maintain prices at the upper end of the ranges for an extended time. He said it will trigger development in high-cost basins outside OPEC such as the West Coast of Africa, the Caspian Sea and even Canada's East Coast. "If OPEC is willing to defend that price level it's going to convince a lot of companies to revive cap-x (capital expenditure) budgets and eventually bring a lot more crude onto the market," he said. At the IPE, which sits at the end of London Bridge on the Thames River, Gutteridge is certain that given all the confusion right now, the traders on the futures markets will still have the final say in the price of oil. "We bring transparency and neutrality," he said. "This a tough, cut-throat business we bring a very high degree of stability." calgaryherald.com