John. Not an aggressive energy stock buyer yet.
1. There's been an increase in OPEC cheating as reported by IEA.
"Excluding Iraq, which isn't bound by the group's production accords, OPEC nations
pumped 24.47 million barrels a day in September, 1.26 million more than their
September target."
2. Recent estimate is that growth of oil use is the slowest in 17 years according the agency. And if the recession deepens, demand will drop even further.
I've got no problem with missing the bottom in a sector. The San Diego Iso-Chicken likes to wait for the bottom to be confirmed. If that means giving up some early cheese to the knife catchers? No problemo!<g>
Till then, have about a 1/8 portfolio weight in the patch simply as a hedge against a ME supply cut-off in the event of a widening war OR the takeover of another key gulf producing nations government by extreme fundamentalists.
And of course occassional ST trades.
Isopatch
Here's the test of the Bloomberg piece about the IEA:
Paris, Oct. 12 (Bloomberg) -- Oil demand will rise at the slowest rate in 17 years
after the Sept. 11 terrorist attacks reduced jet travel and undermined an already
slowing economy, the International Energy Agency said.
Consumption this year will increase by just 120,000 barrels a day, or 0.1 percent, the
lowest since a recession of 1980 through 1984 and 400,000 less than expected last
month, said the agency, whose 26 members use about three-fifths of the world's oil.
Daily use in 2002 will rise by 600,000 barrels, two-thirds the average of the 1990s,
the IEA said.
``The events of Sept. 11 have made the outlook an awful lot worse,'' said Julian Lee,
senior energy analyst at the London- based Centre for Global Energy Studies.
``Things are looking fairly bleak.''
The assessment may harden opinion within the 11-member Organization of Petroleum
Exporting Countries to reduce output for a fourth time this year to prop up oil prices.
Crude oil in London, which has lost 16 percent since the attacks, rose as much as 2.5
percent to $23.02 a barrel today on concern U.S. retaliation in the Middle East may
broaden beyond Afghanistan.
The IEA had already reduced its outlook for oil demand this year seven times in nine
months because of slowing economies. Lower use of jet fuel accounted for the bulk of
the latest reduction. Because of a global recession, oil use fell between 1980 to 1984,
said Klaus Rehaag, editor of the IEA report.
Jet fuel deliveries in the U.S., the biggest market, last month declined by 18 percent as
Delta Air Lines Inc., Virgin Atlantic and other carriers cut flights, the report said.
OPEC Supply Declines
While the outlook for demand has worsened, world oil supply declined and
inventories rose. Daily oil output in September fell to 76.75 million barrels, down
500,000 from August as OPEC members reduced sales.
Excluding Iraq, which isn't bound by the group's production accords, OPEC nations
pumped 24.47 million barrels a day in September, 1.26 million more than their
September target. Supply from Iraq was little changed at 2.77 million barrels a day.
Oil-industry inventories in member countries of the Organization for Economic
Cooperation and Development held 2.61 billion barrels at the end of the month, up
50,000 barrels a day from revised July figures, the IEA said.
OPEC, except Iraq, agreed in July to reduce supply by 1 million barrels a day starting
Sept. 1 in a bid to keep oil prices around $25 a barrel. The group is considering new
cuts of as much as 1 million barrels a day to support prices, Ali Rodriguez, OPEC's
secretary general, said on Wednesday.
While OPEC is reining in supplies, independent producers will likely pump more this
year and next as high prices spur investment. Non-OPEC output will likely rise by
700,000 barrels daily this year, 100,000 more than expected last month, and by
870,000 barrels next year, 80,000 more than forecast in September, the IEA said.
Russia, the third-largest producer, will boost daily supplies this year by 500,000
barrels this year to 7 million, the IEA said. OPEC is concerned that rising supply from
Russia is limiting its efforts to support prices.
Reduced Call on OPEC
Because of the new outlook, the IEA trimmed its estimate of the market's need for
OPEC oil in the fourth quarter by 1.4 million barrels daily to 25.8 million. It cut the
first-quarter 2002 estimate by 1.2 million barrels to 25.7 million.
For 2001, the so-called call on OPEC stands at 26.5 million barrels and the outlook
for next year at 26.0 million." |
