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To: Larry S. who wrote (34727)	11/15/2001 3:48:36 PM
From: Nemer	Read Replies (2) \| Respond to of 53068

Top Financial News 11/15 15:27 Saudi Minister al-Naimi Says Oil Market in `Crisis' (Update8) By Sean Evers, Stephen Voss, Patrick Gordon and Alex Lawler Vienna, Nov. 15 (Bloomberg) -- Saudi Oil Minister Ali al- Naimi, whose nation holds a quarter of the world's reserves, said the oil market has entered ``crisis mode'' because of slowing demand and a looming price war between OPEC and rivals such as Russia. ``We will see who has the resolve,'' al-Naimi told reporters in Vienna. ``If the price really drops and stays down, you will see a lot of instability not only in the economy but also in the stock of companies and their ability to invest in future production.'' AO Yukos Oil Co. Chief Executive Mikhail Khodorkovsky, who runs Russia's No. 2 oil company, rejected the call for cooperation. The Organization of Petroleum Exporting Countries, which pumps a third of the world's oil, yesterday declined to cut output a fourth time unless non-members also lower shipments. Oil plunged $1.84, or 9.6 percent, to $17.33 a barrel in London, almost half its price of a year ago, on concern supplies will flood the market. Russia, the second-largest oil exporter after Saudi Arabia, boosted output this year as OPEC cut back. In New York, oil fell 12 percent to $17.45, a 2 1/2-year low. Lower energy costs may help revive a world economy growing at a 2.2 percent rate, the slowest in eight years. A drop in oil prices of 10 euros ($8.80) is equal to an 800-euro tax cut for an average European household, Merrill Lynch & Co. estimated. Eroding Value OPEC's decision has erased $58.4 billion from the stock- market value of Europe's three largest oil companies, Royal Dutch/Shell Group, BP Plc and Total Fina Elf SA. The industry for much of the past two years reported record profits when energy prices were rising. OPEC wants a 6.5 percent cut in exports from Russia. Russia produces 6.8 million barrels a day, and before OPEC met had offered a reduction of 30,000 barrels a day, or 0.4 percent. Al- Naimi called that ``extremely unreasonable.'' Russian producers signaled they were prepared for a fight. ``OPEC's proposals are not acceptable for Russia,'' Khodorkovsky said. ``Prices will collapse, but our Arab colleagues won't be able to keep low prices more than two years'' because their economies are dependent on oil exports. Russia, which Saudi Arabia overtook as the world's largest oil producer in 1992, should expand output to 9 million barrels a day, he said. Conditional Cuts OPEC yesterday agreed to lower production by 1.5 million barrels a day on Jan. 1, on the condition that non-OPEC producers also cut 500,000 barrels a day. The move would reduce OPEC's oil quota to the lowest level since the Gulf War. OPEC ministers said they had commitments from Mexico and Oman, though they were still holding out for a larger contribution from Russia and a reduction from Norway. Russian Prime Minister Mikhail Kasyanov today said the country will not agree to a ``large reduction'' in exports, Interfax reported. OPEC Secretary-General Ali Rodriguez said in Vienna that he will meet with Russian officials next month. Most of Russia's production is now in the hands of private oil companies such as OAO Lukoil and Yukos. ``OPEC has publicly gone out of its way to threaten Russia, thinking that it can win this fight,'' said Raad Alkadiri, an analyst of Middle East oil at Washington-based Petroleum Finance Co. who was attending the OPEC meeting. ``OPEC clearly believes that Russian companies are vulnerable to low prices and will eventually give in.'' Norway said it remained opposed to making production cuts. Price Targets OPEC has aimed to keep its benchmark oil price in a range of $22 to $28 a barrel and had succeeded in keeping prices within, or above that, for two years until September. Those days are over. ``We have no floor'' for prices, OPEC's Rodriguez said today. ``We will suffer the consequences of our common problem if we don't have a common solution.'' The Saudi minister said he expects next year's increase in oil demand will be ``very small'' because of struggling world economies. As a result, cooperation from non-OPEC producers is ``more important'' than OPEC's compliance with its quotas. The minister denied that Saudi Arabia and OPEC was starting a price war since the nation isn't planning to use its 3 million barrels a day of spare production capacity. Should other producers pledge cuts, OPEC has no mechanism to verify whether they take place. Russia in 1998 and 1999 failed to deliver on a promise to reduce exports. Saudi Arabia is already feeling the pinch of lower oil prices. Its government is expected by two of the country's top three banks to post a budget deficit of at least $5 billion in 2002. Russia ``is engaged in a game of chicken with OPEC, and OPEC cannot afford to flinch first,'' said Eric Kraus, chief strategist at Nikoil Capital Markets in Moscow. ``Oil prices in the mid-teens will focus minds, and I think Russia will eventually cut'' supply, he said.

To: Larry S. who wrote (34727)	11/15/2001 3:50:40 PM
From: Nemer	Respond to of 53068

11/15 13:58 Oil-Service and Drilling Stocks Fall as Crude Drops By Mark Johnson New York, Nov. 15 (Bloomberg) -- Nabors Industries Inc., BJ Services Co., Weatherford International Inc. and other oil-service and drilling companies fell for a second day as crude oil prices declined. Nabors tumbled as much as 16 percent and BJ Services and Weatherford declined as much as 15 percent. Members of the Organization of Petroleum Exporting Countries, meeting in Vienna yesterday, said the group won't cut oil output without support from producers outside the organization. The producers probably won't cooperate anytime soon, and oil prices will continue to drop, analysts said. ``We're looking at a very difficult oil market in the near term,'' said George Gaspar, an oil company analyst at Robert W. Baird & Co. ``It's going to cause the exploration sector to be more cautious in drilling.'' Crude oil on the New York Mercantile Exchange fell as much as $2.59, or 13 percent, to $17.15 a barrel today. The Nymex price fell 8.9 percent yesterday. Gaspar downgraded several oil stocks, including Nabors, BJ Services and Exxon Mobil Corp. to ``market perform'' based on the outlook for oil prices and drilling activity. Oil prices probably won't rebound until the second half of next year, and crude might fall to the ``low teens,'' Albany Corp. analyst Robert Christensen said in a report. Saudi Oil Minister Ali al-Naimi, whose nation holds a quarter of the world's reserves, said in Vienna the oil market has entered ``crisis mode'' because of slowing demand and a looming price battle with rivals such as Russia. Exxon Mobil Shares of Exxon Mobil, the biggest publicly traded oil company, fell $1.74, or 4.5 percent, to $36.96 in early afternoon trading. The stock declined 4.4 percent yesterday. The company is based in Irving, Texas. Nabors fell $4.65, or 15 percent, to $26.81. It dropped 10 percent yesterday. BJ Services fell $3.16, or 13 percent, to $22.10. It declined 8.6 percent yesterday. Weatherford lost $4.35, or 13 percent, to $29.35. It tumbled 10 percent yesterday. The companies are based in Houston. Global Marine Inc. fell $2.11, or 13 percent, to $13.70. Baker Hughes Inc., the third-biggest U.S. oilfield-services company, fell $4.46, or 13 percent, to $30.54. Transocean Sedco Forex Inc., the biggest offshore oil and gas driller, dropped $2.97, or 11 percent, to $25.28. BP Plc's American depositary receipts, each representing six ordinary shares, fell $2.83, or 6.2 percent, to $43.07. The U.S. shares of Royal Dutch Petroleum Co., which owns 60 percent of the Royal Dutch/Shell Group, fell $2.35, or 4.8 percent, to $46.70. Shell is the second-biggest oil company. Royal Dutch Petroleum is based in The Hague, and London-based Shell Transport & Trading owns the rest of the group. London-based BP is the third- biggest oil company.