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

To: The Ox who wrote (80859)	12/6/2000 11:00:16 AM
From: Timelord	Respond to of 95453

On topic news, nice comments from ESV about FGH: ENSCO 7500 Semisubmersible Drilling Rig Commences Operations biz.yahoo.com ATWOOD OCEANICS INC (ATW) ON DECEMBER 06, 2000, THE COMPANY ANNOUNCED IT HAD PURCHASED THE SEMISUBMERSIBLE UNIT "OCEAN SCOUT" FROM OCEANEERING INTERNATIONAL, INC. FOR $4.5 MILLION. biz.yahoo.com

To: The Ox who wrote (80859)	12/6/2000 11:04:11 AM
From: dsindakota	Respond to of 95453

Phil Flynn's report today...Well worth reading. Wednesday 12-6-00 Let the oil flow! Iraq wins and the bull is bloodied. Crude oil was crushed in the most dramatic selloff week since the end of the Persian Gulf War. The $30.00 mark for crude falls and the look horrible. The UN failed to keep Iraq in check and the sanctions are in shambles. The UN is allowing Iraq new flexibility in spending their billions in oil revenue. The existing agreement of food for oil was extended for 6 months and this time the list of acceptable items for purchase has been expanded. The Clinton Administration said they trumped Sadaam Hussein but it appears Sadaam was the real winner. Iraq is exporting once again and we have smooth waters until the next demand surfaces. As OPEC has repeatedly stated and the market now apparently agrees, the world has plenty of crude oil. The US and Bill Richardson has continually pushed OPEC for more production. We’ve had 2 consecutive weekly increases in crude oil stock according to the API and we were looking for a third last night. But we were given a substantial drawdown in crude of 3.729 million barrels. Our stocks stood at 287.8 mil brls and dropped in the latest week to 284.071 mil brls. This size drop would normally cause a substantial snap back in the market but the API also reported huge builds in unleaded and distillates. Distillates were up 3.289 mil and unleaded up 3.239 million barrels. The refiners were refining! And it’s a good thing as we need the production with inventories so low. We’ll wait and see if the DOE out later today backs this up. Iraq is back on line and now Iran chimes in saying OPEC may soon cut production. There are members of OPEC who are concerned the price of crude may fall. They’ve gotten used to the revenue! Meanwhile, Kuwait said any loss from Iraq would be made up by other OPEC members. Another day, another story. Stay tuned! Did the crude, unleaded and heating oil get too high? Or did the selloff yesterday take us too low? The dramatic selloff signals a significant shift in market psychology and tells us we went too high too fast for the market to sustain it. We’ve not been below $30.00 since last August and it’s technically significant that we’ve fallen below that mark. If the bull is just bloody but still alive, we must come back above this area quick or we’ll be testing lower levels soon. We really are still in the same position that got us here in the first place. Nothing has changed. Hillary Durgin of the Financial Times of London explains the importance of the US having a coherent energy policy. She reminds us that if Iraq pulls its oil off the market again and raises their demand bar even higher, we’ll be in terrible trouble. How far will we bend before we can no more? This will have serious implications and the situation will not just go away. Low inventories are a fact and the shortage of refining capacity is a fact . The UN may have sent a wrong message to Iraq signaling that all they have to do is demand it and they’ll get it as long as they keep their oil flowing. Ms. Durgin also points out that the US Energy Secretaries have been regarded as weak and this position has been filled by someone with no knowledge of the industry or its players. She continues that the next person to fill this post must have a good understanding of the industry and be able to convey the complexities of regulations et al to Congress. So the underlying problem remains with no attempt at repair. The price has come down but if the fundamental problem remains, the drop will only be temporary. Natural gas is a good case in point. We have extremely tight supplies of natural gas and almost any price being asked for it is being paid. One reason natural gas usage is so strong is because it’s cleaner than other fuels and thus cheaper to produce. Natural gas is the choice for many utilities - electricity as well as home heating in the Midwest - as environmental restrictions make nuclear, coal and petroleum based power production unattractive. The costs are high to satisfy government regulations for these potential alternative energy sources. Usage has skyrocketed for natural gas as consumers use more as we buy bigger homes etc. Supplies are running apprx 17% behind last year and if we have continued severe cold, we could be totally tapped out by the end of the winter season. We’ll get the AGA out later today and estimates call for a drop of 86 bcf. In overnight trade we are up in the area of 8450. This is another new high and it’s hard to say how high is too high when demand for natural gas remains this strong and supplies remain this tight. Profit taking is inevitable as we trade off of weather forecasts. This bull will be as slippery as a greased pig. Oil shock! And I’m not talking about yesterdays selloff but Alan Greenspans biggest fear. He said yesterday that the recent rise in energy costs could put a damper on the US economy as consumers and producers slow down their spending because they’re faced with higher energy bills that must be paid. The market is looking for an interest rate drop early next year. If we get the decrease in interest rates and the economy starts cooking again, demand for energy will go right back up another notch and frankly, we’ve not seen it go down much now! Perhaps Mr. Greenspan rested a little easier last night with the selloff and crude coming below $30.00. Bottom line: the fundamental situation has not changed and the bull will be healed and rally again. The US needs to reduce its reliance on foreign oil. The US needs to aggressively pursue its own untapped resources of crude oil and natural gas off shore and on. The US needs a more balanced approach to government regulations and environmental controls so we can aggressively permit the construction and modernization of refineries and pipelines. Until the light of the facts and truth of the situation is clearly seen by the educated and informed, we are destined to repeat the mistakes of the past and the 1970s show’s us the real economic damage that can be done. We were stopped on all our positions losing apprx 50 pts on crude, apprx 200 pts on heating oil and apprx 200 pts on unleaded. The only recommendation today is a buy on jan crude with a buy stop at 3000 even and if you get long, a sell stop of 50 pts. Call me - PHIL FLYNN at 800.935.6487. See me tonight at 5pm Chicago time at www.webfn.com - the show lasts until 6pm Have a GREAT day!