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

To: Ms. X who wrote (9563)	1/24/1998 1:10:00 AM
From: The Jedi	Read Replies (1) \| Respond to of 95453

This is from FWN New York-Jan. 23-FWN--Energy futures once again failed to sustain an intraday rally and fell to new contract lows in the last hour of trading Friday afternoon. Trade sources said the inability to sustain the rallies Friday morning set the locals off on a fishing trip for sell stops under the market. The selling pressure was able to take hold quickly by early afternoon and eventually led to a new round of sell stops and fresh fund selling as crude oil prices set new 45-month lows near the close. Traders agreed the market was still reeling from the technical and fundamental damage sustained Thursday. News of the biggest rise in crude oil stocks in the last 10 years in the weekly American Petroleum Institute's inventory report forced March futures down below the last key area of technical support at the $16.34 level. This confirmation of tremendous U.S. supplies and the technical damage to the long-term charts reinforced thinking the energy market will move swiftly to the downside to ultimately force OPEC to rescind its ill-timed increase in production quotas. "Everyone is simply sitting on the edge of their seat, worried about the big speculative short position," one broker said on the ideas that something magical will suddenly turn prices around. He said the technical picture is so bearish, and analysis of the fundamental outlook provides little for the bulls to hang their hat on either. Some traders also linked the weakness Friday to the ongoing scandal surrounding President Clinton. The impending paralysis of leadership at the White House raises serious questions about U.S. efforts to help the International Monetary Fund bailout for Asia, one trader said. More important, Saddam Hussein is laughing at the President and senses a real opportunity to press for all sanctions to be lifted, he said. Clinton will be accused of trying to divert attention from his problems if he should unilaterally attack Iraq for its failure to allow the U.N. arms inspectors to do their job, he added. Thus, the market sees a small chance for military action against Iraq unless Hussein miscalculates, he concluded. However, following a briefing of the U.N. Security Council by UNSCOM director Richard Butler Friday, U.K. Ambassador to the U.N. John Weston called Iraq's position on arms inspectors a very serious and direct challenge to which the Security Council cannot acquiesce and still retain credibility. But the market's further erosion following these comments signals that participants remain skeptical there will be any effective response to the Iraqi interference. Above-normal temperature outlooks for next week kept the heating oil market under pressure Friday afternoon after the early rebound. This break and close back below Thursday's low have some traders looking for 43 cents in the near term.