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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: trustmanic who wrote (2951)	3/21/2002 12:01:59 PM
From: David Alon	Read Replies (1) \| Respond to of 11633

CALGARY (GlobeinvestorGOLD) – Crude oil prices are on the rise again and the Toronto Stock Exchange’s index of oil and gas stocks is pushing to new record highs, but investors may want to demonstrate some caution. What appear to be rational, justifiable moves may be more a case of political uncertainty running roughshod over fundamentals. The argument for higher oil prices -- West Texas Intermediate has climbed above $24 (U.S.) per barrel in recent days from a low of $18 in January -- is supported by indications of a U.S. economic recovery and the uncertainty surrounding a U.S. invasion of Iraq. OPEC’s commitment to maintain their production quota through the second quarter, also supports the higher oil price story. The Federal Reserve also abandoned its view that weakness poses the greatest risk to the economy, confirming speculation that a rebound is taking hold. A strong economic recovery should increase oil demand. As well, the American Petroleum Institute reported a sizable draw of 440,000 barrels, the first inventory decrease in three weeks. To be sure, uncertainty over a possible U.S. foray into Iraq also has the oil markets skittish. An invasion would most likely disrupt oil supplies from Iraq, which is currently producing approximately 2.6 million barrels a day, and would further reduce global production. Additionally, Iraq has suggested targeting neighbouring countries' production and reserves. Uncertainty also surrounds the level of sympathetic potential support for Iraq from other oil producing countries. Finally, OPEC has committed to maintain its production quota (currently 21.7 million barrels a day) through at least the end of the second quarter and has suggested it might consider extending the quota throughout the entire year. The quota is at its lowest level since March 1991. There is concern that with a strong recovery in the second half of this year, the current quota would be insufficient to meet demand thereby creating upward pressure on oil price. All of these indicators are bullish and support the recent oil price rise and its current high price level. So, why are we so reticent to jump on the bandwagon? With respect to the recovery in the American economy, the data are still limited and do not necessarily indicate a trend. The U.S. economy could bump along in neutral without significant increases in energy requirements. What about the inventory draw? Although inventories decreased last week, total U.S. crude oil inventories are high relative to recent years’ levels with approximately an 8 million barrel surplus above the five-year average. This means there is still a supply overhang. An American incursion into Iraq is possible and cause for concern. However, the U.S. response to September 11 has demonstrated that there is a process to its foreign policy; the U.S. constructs a case with evidence in order to build a consensus with its allies. This is a deliberate process and the current effort has met with significant resistance. In addition, there exists over 7 million barrels a day of OPEC capacity to offset a loss of Iraq's current production of 2.6 million barrels a day. OPEC quotas are as low as we've seen in 11 years, however OPEC is still cheating. Current production is 22.5 million barrels a day or approximately 800,000 barrels a day above quota. Within OPEC, Venezuelan president Hugo Chavez recently replaced a number of senior business executives with political appointments at PDVSA, the Venezuelan National Oil Company. The political need for hard currency through higher production levels could supercede any quota agreement. More significantly, however, is the market concern over non-OPEC production. OPEC has requested that Russian cuts of 150,000 barrels per day remain in effect through to June. Recent statements by Russian government officials suggest the country may end its reductions. More importantly, the data suggest that Russian and FSU (Former Soviet Union) production has actually increased since last year. Total net crude oil and petroleum products exports from the FSU in January were over 700,000 barrels per day above December levels. In February, total FSU net crude and product exports were estimated to be 250,000 barrels a day above January levels. Near term, we expect oil prices are likely to remain at current levels due to political uncertainty but believe that non-OPEC oil production increases and lofty inventory levels should pressure oil prices lower to the $20 per barrel level. For investors, oil and gas stocks have had an excellent run over the past six to eight weeks, with many oil and gas-related equities rising more than 30 per cent. These gains have been predicated on higher commodity prices and merger speculation. For short term and momentum investors, we recommend taking some profits. For long term investors, we reiterate our recommendation to focus on value names with identified growth such as Canadian Natural Resources Ltd. and Nexen Inc. Wilf Gobert is a managing Director and Brian Prokop specializes in the oil and gas industry for Peters & Co., a Calgary-based full-service investment dealer.

To: trustmanic who wrote (2951)	3/21/2002 12:04:58 PM
From: Cogito Ergo Sum	Read Replies (1) \| Respond to of 11633

Hi George, I sold some traders today. I'm looking for closer to 10 to add more (hoping anyway :o). People also look at the dividend % when deciding. Actually I think more people will look at that first, especially first timers. I know I did when I started investing in these, and worry about the details later LOL..... regards Kastel