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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (13206)	9/22/2002 8:11:52 AM
From: kormac	Read Replies (3) \| Respond to of 206214

Oil stocks scrape bottom of barrel news.independent.co.uk By Leo Lewis 22 September 2002 US oil inventories have plunged to 18-month lows and are set to shock traders next week with another sudden drop. Total US petroleum stocks, one of the key factors behind global oil prices, have already slipped well below normal levels, and are now expected to fall further as autumn demand rises. The inventories fell by 10.3 million barrels two weeks ago, and analysts believe they are set for a similar drop when official figures come out in three days' time. That would push crude prices up even further than the 49 per cent by which they have already risen this year. The drawdown in inventories is expected to stay high between now and the end of the year as northern hemisphere countries prepare for increased use of heating oil and other products. Observers of tanker markets have also noted a recent sharp fall in the number of sailings from the Gulf region. Stephen Pfeifer, chief oils analyst at Merrill Lynch, says the prospect of US military action in Iraq has hidden the critical issue of inventory levels. The $8 per barrel "war premium" built into current oil prices reflects fears that a conflict in Iraq will disrupt supplies from the Middle East. But the fundamentals behind the oil price justify high prices anyway. Merrill Lynch believes that the inventory drop is enough to merit an oil price of $26 per barrel, as compared with the current spot price of $28.50. "Under normal circumstances, such a big inventory draw would push Opec and other producers to increase production," said one London oil trader at Amerada Hess. "But because everyone is just writing it off as a war pre-mium, the serious inventory issue is being ignored. There is worse to come, which means lots of shocks in store for the market." The inventory issue has been rendered even more acute by Opec's decision on Thursday to leave its current production curbs in place. In what was billed as potentially one of the most explosive Opec meetings of the decade, the agreement was passed with relatively little argument. But given the current state of the US inventories, the decision in effect forces Opec members to break cartel rules and cheat on their production quotas. As one analyst explained: the one thing that may save these US inventories is the fact that oil stocks are at 18-month lows but Opec cheating is at 18-month highs.