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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Lois R who wrote (6246)	12/30/1997 9:03:00 AM
From: David Spruiell	Respond to of 95453

FOCUS-Oil tumbles again as Asia crisis hits demand Monday December 29, 4:01 pm Eastern Time By Richard Mably LONDON, Dec 29 (Reuters) - World oil prices fell to their lowest for almost two years on Monday as Iraq moved quickly to resume UN-monitored oil exports and Asia's financial crisis started nibbling at global demand. Mild winter weather in the northern hemisphere also contributed to the slide on crude markets pushing the price of international benchmark Brent blend crude below $17 for the first time since May 1996. London February futures for Brent settled at $16.60, down 73 cents on the day and their weakest value since February 1996, against a backdrop of bearish news about Iraqi oil exports and Asian refinery output. Dealers said speculators at futures exchanges in New York and London were making fresh bets that oil's 20 percent slump since early October had further to go. Iraqi oil minister Amir Muhammad Rasheed said on Saturday that Iraq could resume crude exports under the third consecutive six-month phase of the U.N. oil-for-food arrangement within a week. Baghdad has prepared a new aid distribution plan which now only needs rubber stamping by U.N. Secretary General Kofi Annan. Annan may also recommend in early February that Iraq be permitted to raise sales under the exchange from the previous regime of $2 billion every 180 days. ''The market will remain negative with Far Eastern refiners cutting runs and the prospect of a resumption of Iraqi oil-for-food sales in the next few days,'' said London-based brokers GNI. Asian oil dealers said refiners in the region, buffeted by a big rise in import costs, were reducing crude purchases. Refineries in South Korea, Japan and Singapore had decided to reduce operations as the region's financial crisis started to bite into demand and sent dollar-denominated oil import costs rocketing. Some Asian currencies have fallen by up to 50 percent versus the dollar in the past few months. Mild winter weather in the big consuming countries of the western hemisphere was also undermining oil prices, now running $2 below the average for 1997 and $7.50 below the year's high last January. Winter heating oil prices in northwest Europe dipped to a 23-month low on Monday. Stocks of heating oil and diesel fuel in the European Union at the end of November were 17 percent higher than the same time a year ago, according to the agency Stichting Euroilstock. Though world oil demand is expected to rise next year, traders are worried that rising supplies will outweigh the extra consumption, especially if Asian economic growth slows significantly. ''The supply-demand fundamentals in 1998 look weaker than they have appeared for some time,'' said finance house Dresdner Kleinwort Benson in a report. OPEC producers are expected in January to start pumping higher output to meet new quotas awarded in Jakarta under an agreement to supply 27.5 million barrels of day (bpd) during the first half of 1998. Analysts expect endemic quota violations to quickly take the Organisation of the Petroleum Exporting Countries (OPEC), responsible for some 40 percent of world oil supplies, toward 28.5 million bpd. Leading OPEC producer Saudi Arabia remains confident oil prices will recover next year but traders say its new 8.76 million bpd output quota is one of the biggest threats to oil prices. ''We have to admit that OPEC will need an extraordinarly large amount of luck if they are to obtain the same average prices for their crude exports in 1998 as they have this year,'' said Kleinwort Benson. Saudi Oil Minister Ali al-Naimi said last week Riyadh would pump at its new quota but had no intention of dumping crude on a saturated market. ''Saudi Arabia will not produce more than what the market needs. We are not out to dump our crudes on tankers and sell them at whatever prices,'' Naimi told Reuters in an interview.