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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Frank Pembleton who wrote (11583)	5/2/2002 8:31:17 AM
From: Frank Pembleton	Respond to of 36161

Watching Oil and Gas Interview by Arnis Peterson There is a "war premium" on the price of oil, pushing it about $6 dollars a barrel higher than it normally would be, but the real one to watch is the rising price of natural gas, says TD Financial Group Senior VP, Commodity Futures Doug Jones Summary The oil and gas market has been quite unusual for the last 3 months. The main factor that is supporting high oil and gas prices is the "war premium". If we did see peace in the Middle East and in other parts of the world, you would see oil prices back down to $20 or $21 dollars a barrel. The war premium, which is about $5-$6 a barrel for oil is as a result of fear. Fear that the U.S. will be drawn into a war with Iraq, and tensions in the Middle East. But it wouldn't matter if the oil supplies from Iraq are disrupted. It would be made up elsewhere. That and the fact that oil inventories are high means that the high price of oil right now isn't really justified. Natural gas is the real sleeper in the energy market. After dropping at the end of last year, the past 4 or 5 months has seen the price of natural gas increase both in Canada and the U.S. The rising price is a result of stronger economic growth, and increased demand for co-generation for electricity in the U.S. Because the price of gas was cheaper 6 months ago, there was no new exploration. As a result no new reserves have been found for the gas that has been lost and the price has gone up. Expect the price of natural gas to go even higher over the next couple of weeks, over $4 dollars U.S. per million BTU. The chart below shows the price of natural gas over the past 6 months, in U.S. dollars, as per Mmbtu, or in English, per million British Thermal Units. investorcanada.com