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

To: Think4Yourself who wrote (66604)	5/19/2000 9:21:00 AM
From: Wowzer	Respond to of 95453

In the WSJ: May 19, 2000 Crude-Oil Futures Close Above $30-a-Barrel Mark By PETER A. MCKAY Staff Reporter of THE WALL STREET JOURNAL NEW YORK -- Crude-oil futures settled above $30 a barrel for the first time since producers' output increased in late March, a move analysts now say those nations may have to repeat to keep prices from going too high in the energy market. After driving prices up with a production cutback in the spring of 1999, the Organization of Petroleum Exporting Countries on March 27 tried to ease worries that energy costs were spiraling to inflationary levels with a 1.7-million-barrel boost in daily output. In anticipation, prices had already begun falling by the time OPEC ministers made the announcement, which continued to nudge oil down for several weeks. But since mid-April, prices have been creeping back up as the U.S. summer-driving season has drawn near, statistical reports continue to show low reserves of fuel and critics have blasted OPEC's plans to decide future increases. Traders and analysts said the move over the psychologically important $30 mark was just the final proof that OPEC may yet need to take more action -- and soon -- to steer drivers away from pain at the gas pump this summer. "Most people are saying now that the last rise essentially just kept us even with demand," said analyst Phil Flynn, of the brokerage Alaron Trading Corp. in Chicago. "All it effectively did was slow the perception that prices were high. But now we're back to hard numbers, basically back to square one." Nearby June crude-oil futures rose $1.01 to $30.33 at the New York Mercantile Exchange, their first close above $30 since March 17. The contracts had peaked at $29.99 early in the day but surged in the final half-hour or so as speculators and technical traders hurriedly bought, traders said. Market watchers agreed, however, that the run-up has been peculiar in that low gasoline stocks have helped drive up crude prices, a phenomenon that would usually take place in exactly the opposite direction. Statistics released this week by the Department of Energy showed a rise in crude-oil reserves of 200,000 barrels to 308.8 million barrels for the week ended May 12. Gasoline reserves added 1.7 million barrels to 202.5 million barrels, according to the DOE. Yet, one analyst estimated that OPEC would have to raise production by at least another million barrels a day at its June meeting to keep gasoline prices steady. Mr. Flynn also said the 17-member cartel would have to nix its recently unveiled idea of maintaining a sliding "price band" in which OPEC would unilaterally increase production without a member meeting if prices hit certain levels. The higher the price, the bigger the production increase. "There was definitely a smirk built into today's trading at the price-band idea," Mr. Flynn said. "People just don't think it will work, and that has a psychological effect on the market." Energy Secretary Bill Richardson, who helped coax OPEC members to raise output in March, met Thursday with Mexico's oil minister, Luis Tellez, in Washington, and said he was concerned about the recent price spike. "OPEC's decision in March was a good decision," Mr. Richardson said. "We just want to make sure that there is enough oil on the market internationally for everybody." Other energy-product futures moved higher in sympathy with crude, as June gasoline added 1.05 cents to close at 99.03 cents a gallon and June heating oil advanced by a sharper 2.51 cents to 79.87 cents a gallon. In other commodity markets: PLATINUM: Futures surged at Nymex after General Motors said it will cut palladium use by 30% by 2002 and replace it with platinum. The July contract rose $18.90 to $505.80 a troy ounce. GM Purchasing Director David Andres said GM will use 10% more platinum in catalytic converters by 2002. It will move away from using palladium in converters because of the erratic availability of supplies and wild price swings, he said. SOYBEANS: Futures gained at the Chicago Board of Trade, although they didn't hold larger gains, on worries about dryness damage. The July contract rose 6.75 cents to $5.48 a bushel, having touched $5.605. There was early talk that overnight rains had missed important parts of Iowa and Nebraska, but forecasts for widespread Midwest rain released later pressured prices. -- Masood Farivar contributed to this article. Write to Peter McKay at peter.mckay@wsj.com