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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (14513)	6/16/2000 6:13:00 AM
From: Justa Werkenstiff	Read Replies (3) \| Respond to of 15132

POLL-Euro-zone inflation to hit ECB limit in May By David Stamp LONDON, June 16 (Reuters) - Euro-zone inflation will head back to the European Central Bank's 2.0 percent limit when data for May is released next week, economists forecast, confounding expectations that it would fall gently the rest of this year. A new surge in oil prices is definitely a culprit but economists disagree on whether it will be the sole reason for a rebound in the figure, to be released at 1000 GMT on Monday. In a Reuters poll of 22 economists, the median forecast for the Harmonised Index of Consumer Prices was bang on 2.0 percent, up from a 1.9 percent rate in April. The range of forecasts was 1.8-2.2 percent. Inflation, which the ECB and private sector economists alike had expected to fall steadily from a peak of 2.1 percent in March, is back on the agenda. Last week the ECB cited the inflationary threat when it raised interest rates by at least 50 basis points. This week Spain reported inflation hit a 3-1/2 year high of 3.1 percent in May while the Irish rate reached a near 11-year peak of 5.2. Apart from oil the ECB is worried by the inflation impact of two other factors which it cited again in its monthly report on Thursday. One is the revival of euro-zone economic growth and the other is the euro's exchange rate (EUR-), which remains historically weak despite a recent revival. A weak euro pushes up the cost of imports. But Steve Andrew at Merrill Lynch in London said the overall euro-zone picture remained good. ``We don't think it's a harbinger of any problem on the underlying inflation outlook,'' he said. ``Outside of oil everything else is remaining pretty well behaved.'' From a euro-zone perspective, oil is anything but well behaved. After a sharp drop in late March and early April, Brent crude futures (LCOc1) jumped from a trough of just over $21 a barrel to about $29 at the end of May. NOT THE SOLE CULPRIT But Klaus Baader at Lehman Brothers in London, who also forecast 2.0 percent in May, said oil was not the sole culprit. ``Yes, energy prices again clearly did contribute to inflation. If you take them out of the year-on-year rate then you get sizeable differences,'' he said. ``(But) this is not at all just driven by energy prices.'' Core inflation excluding energy had risen in data already released in France and Spain. There were also strong signs the core rate was rising in the Netherlands, Ireland and Portugal. Things aren't going to plan for the ECB and private economists. ``They were expecting that after the March peak inflation would decline smoothly and quite quickly. That's proving not to be the case at all,'' said Baader. A May figure of 2.0 percent would take inflation back to where it was in February. ``Consumer inflation expectations have increased dramatically in the past year,'' Baader said. But those expectations had not passed into higher wage settlements. ``Quite frankly wage developments in Europe are remarkably subdued. In that sense the inflation potential is relatively mild,'' he said. Another reason for not panicking is the ECB's sizeable rate increase last week. It moved from a fixed refinancing rate of 3.75 percent to a variable rate system with a 4.25 percent floor for bids at the weekly auctions starting on June 28. Baader expected the minimum accepted rate to be yet higher at around 4.30-4.35 percent. ``The ECB raised 50 basis points plus,'' he said. ``When the repo is actually conducted it's going to rise by at least five basis points, if not 10.'' (Additional reporting by Danielle Gann) 04:56 06-16-00

To: Justa Werkenstiff who wrote (14513)	6/16/2000 1:21:00 PM
From: Wally Mastroly	Read Replies (1) \| Respond to of 15132

US senators ask White House to 'loan' emergency oil (again): By Tom Doggett WASHINGTON, June 16 (Reuters) - The Clinton administration came under pressure Friday from a bipartisan group of senators to release oil from the nation's Strategic Petroleum Reserve to fight what they called OPEC's tight production policy. The lawmakers urged Clinton to immediately authorize loans of oil from the emergency stockpile to energy companies, who could then sell the crude in the open market and bring down prices with the additional supplies. The so-called oil ``swaps'' are needed, the senators argued, because the Organization of Petroleum Exporting Countries' ``continued manipulation'' of the global oil market has caused record high U.S. gasoline prices that threaten the American economy. ``Mr President, it is simply unacceptable for us to allow our economy, and the world's economy, to be placed in jeopardy by a foreign cartel,'' they said. Democratic Senator Charles Schumer of New York, who was one of the lawmakers who wrote the president, said the administration should swap 1 million barrels of reserve oil a day for 45 days to counter OPEC. ``We are at the point where America is completely at the mercy of OPEC where the price of gas and oil are concerned,'' he told reporters at a Capitol Hill briefing. ``The attempts to cajole OPEC into increasing production have not worked and it is time for the U.S. to play a little hardball.'' OPEC members meet next week in Vienna to decide whether to ramp up production. Saudi Arabia, the largest U.S. oil supplier and most influential member of OPEC, is reportedly pushing for cartel to increase output by about 1 million barrels a day (bpd). Schumer said Energy Secretary Bill Richardson should use the threat of a oil swap as leverage in his talks with OPEC ministers. The senator said he has been talking with Richardson and White House officials about the need to swap reserve oil. ``They are again, I believe, quietly looking at this option,'' he said. Richardson said earlier this week that releasing oil from would have the final say on the issue. The administration has previously ruled out tapping the emergency stockpile, which currently holds 570 million barrels, arguing the reserve should be used if oil supplies are disrupted and not to control prices. Schumer pointed out that the administration's decision on Thursday to loan 500,000 barrels reserve oil to Citgo - enabling the firm to supply one of its refiners with crude to make gasoline - was proof the White House is willing to intervene in the oil market when necessary. ``The fact that they're releasing a small amount of oil toa help a certain refinery shows they're willing to have the (U.S.) government influence the market,'' Schumer said. ``You've got eleven governments influencing the market the other way,'' he said, referring to OPEC. The Energy Department said Friday its decision to help Citgo does not mean more oil releases from the reserve are planned, but it would consider such emergency loan requests from other oil firms. Production at Citgo's huge 310,000 bpd Lake Charles refinery was threatened after the Calcasieu Ship Channel was closed because of a sunken dry dock. The ship channel is the refinery's primary route for incoming crude oil shipments. Conoco (NYSE:COCa - news) said on Friday it was in talks to also draw oil from the SPR as its Louisiana refinery was affected and has had to cut runs by 50,000 bpd to 190,000 bpd.