Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: The Ox who wrote (73889)	9/19/2000 11:35:32 PM
From: The Ox	Respond to of 95453

OPEC sits out as oil reaches a new high By JENNIFER BARRETT NEW YORK Wednesday 20 September 2000 Crude oil prices continued to climb yesterday, reaching another 10-year high on renewed concerns that the planned production increase from the Organisation of Petroleum Exporting Countries would not raise supplies enough to head off higher oil prices. The October contract for crude oil, which expires today, traded as high as $US37.15 a barrel on Monday on the New York Mercantile Exchange before settling at $US36.88, up 96 US cents from Friday's close. That is a gain of nearly $US4 a barrel since the intraday low of $US32.70 set last Monday after OPEC announced that it would increase production. The strong rally in crude, however, did not have as big an impact on heating oil and gasoline. Heating oil for October delivery rose 0.86 of a cent to $US1.0415 a gallon, while October unleaded gasoline gained 0.36 of a cent to 97.02 cents a gallon. At a specially scheduled meeting on September 10, OPEC ministers agreed to raise their oil production ceiling by 3 per cent, or 800,000 barrels a day, starting on October 1. In the days following the announcement, however, analysts and industry groups said that the actual increase is not likely to be anywhere near 800,000 barrels a day, since many OPEC members are already producing at or above capacity. OPEC's official production quota increase is more than the half million barrels a day recommended under the organisation's price band mechanism if the "basket" oil price remains above $US28 for 20 consecutive days, as it had before the meeting. Still, while the latest increase raises OPEC's output target to 26.2 million barrels a day, there are questions about whether some of the organisation's members are even capable of meeting the new output level. Current forecasts among analysts range for a net increase of just 100,000 additional barrels to about 300,000 more barrels a day - far less than the production quota would indicate. One reason for the difference, say analysts, is that many OPEC members are already producing at or above capacity. Only Kuwait, the United Arab Emirates and kingpin Saudi Arabia, the world's largest oil exporter, are believed to have enough capacity for substantial production increases. GNI, a London-based financial services firm, said the oil output for these three countries in August was already higher than the newly approved production ceilings. That means the new agreement may simply legitimise the current "cheating" among members. Further confusing matters were reports on Friday that OPEC president Ali Rodriguez had said that crude oil could still reach $US40 a barrel, though he thought that price level would be unsustainable. OPEC has agreed to meet again on November 12 to reassess oil supplies and prices. In the meantime, the organisation will maintain its price mechanism, which aims to keep oil in its basket (which includes blends from Algeria, Indonesia, Saudi Arabia and Venezuela) at $US22 to $US28 a barrel. Still, few believe prices are likely to fall within that range before next year. In fact, after dipping initially on the OPEC announcement, prices have continued to climb throughout the past week, setting a series of new 10-year highs. "The market is just increasingly concerned that we're not going to see enough oil from OPEC in a timely fashion," said Tim Evans, senior energy analyst for IFR-Pegasus. "We need more oil and we need it sooner, but OPEC ministers are willing to close their eyes until November." Without additional supplies, Evans said, there was no cushion against any supply disruptions. -NEW YORK TIMES