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

To: BigBull who wrote (72504)	9/7/2000 11:35:25 AM
From: Terry D	Read Replies (5) \| Respond to of 95453

More on the missing barrels - Fred Leuffer – Major Oils Where’s the Oil? Nearly 250 million barrels of oil are missing. World supply and demand figures suggest that petroleum inventories should have built strongly by now. Yet, inventory reports have shown only a modest build in Q2 and a draw so far in Q3. Oil analysts are scratching their heads. Are the supply/demand statistics wrong, or is a wall of oil headed our way? Errors and lags in inventory reports and complicated logistics may mask a large build-up of oil supplies. OPEC, led by Saudi Arabia, has increased production in each of the past eight months. Tanker rates have soared due to increased long-haul chartering activity. Inventory reports are conflicting. Oil companies say their inventories are not low. We think there is a lot of oil in Asia and on the water. And it’ s coming here next. It’ s déjà vu in reverse. In 1998 and 1999, OPEC cut production three times before petroleum inventories started to fall and oil prices recovered. So far this year, OPEC has raised its production ceiling twice. OPEC ministers are scheduled to meet on 9/10. Might quotas be raised for the third time? The production trends and timing of changes in OPEC quotas and inventories bear an uncanny mirror image to the events that led to a threefold increase in oil prices. We continue to think oil is headed for a tumble. A thinking contrarian may see these events as an opportunity to sell short oil and oil-sensitive assets. Although it is difficult to time the reversal of a commodity’ s price, we believe that when oil prices start down, the correction will be anything but mild.