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

To: Broken_Clock who wrote (12292)	2/20/1998 4:35:00 PM
From: Swede	Respond to of 95453

TO all the buddies: FWIW: Friday February 20, 3:27 pm Eastern Time FOCUS-Funds say '98 may not be all bleak for crude By Harry Milling NEW YORK, Feb 20 (Reuters) - After a whopping 33 percent plunge since October, crude oil prices have entered uncertain terrain, but fund managers and asset advisors expect it to become a more attractive bet before the year is over. ''We are trying to find the bottom like everyone else,'' said Mark Anson, portfolio manager of the Oppenheimer Real Asset Fund in New York that has $98 million in assets. ''We are looking at this as a good buying opportunity. We are a bit optimistic looking at the fourth quarter, so it behooves us to start shopping now,'' said Anson. Anson had been cutting the fund's exposure to crude during the recent decline. The fund's exposure is usually significant since it is benchmarked to the Goldman Sachs Commodity Index. A global glut in crude oil started last fall. In November, the Organization of Petroleum Exporting Countries (OPEC) raised its official production ceiling by 10 percent to 27.5 million barrels per day (bpd) based on increasing world demand, led by Asia. But, Asia's currency crisis deepened by yearend, and the world's dollar-denominated crude became too expensive for Asian nations to buy. Meanwhile, a mild winter in key heating oil demand centers in the West only cut demand further. The price of light sweet crude on the New York Mercantile Exchange has fallen from $23.15 a barrel in October to $15.45 this week, its lowest level in nearly four years. With the outcome of the U.S.-Iraq standoff uncertain, crude prices have entered a choppy trading range, an unattractive scenario for fund managers who like to ride a decisive trend. The United States has two aircraft carriers in the oil-rich Middle East Gulf in response to Iraq's defiance of U.N. weapons inspections. While some fund managers cut their exposure to crude, others have resorted to equally balancing their bullish market positions with bearish ones to neutralize the uncertainty. ''It's a very difficult time to express strong opinions about the short-term environment . . . We have a very neutral position right now,'' said John Hummel, president of AIS Futures Management LLC, a commodity trading advisory firm based in Wilton, Conn. with about $250 million in assets, The market's uncertain direction has led portfolio manager Derek Van Eck to have what he calls only a ''tiny short position'' in crude for his New York-based Van Eck Global Hard Assets Fund with $300 million in assets. But, once the Iraqi crisis is resolved, the market will begin to assume a decisive trend, creating an attractive trading opportunity, said advisors. They are divided over whether the direction will be up or down, however. ''What is going to bring us to an $18.00 to $20.00 range in the final analysis is that production is going to have to be cut,'' said Douglas Chapman, managing director at Houston-based Torch Energy Advisors, a financial advisory firm which manages about $1.5 billion in oil and gas assets. ''I think OPEC will be the one that will do that,'' said Chapman, who believes OPEC will stem the decline by cutting back its quota. Unless a special meeting is scheduled, OPEC is expected to discuss quotas again at its biannual meeting in June. Anson, of the Oppenheimer Real Asset Fund, sees Asian demand recovering toward the end of the year. ''If Asia recovers quickly enough, combined with some smart OPEC policies, i.e. a cut in production, we can see the price of oil come back to the $17.00 to $19.00 range by fourth quarter,'' he said. Some financial advisory firms and funds that use chart-based trading techniques expect prices to resume their decline. ''It looks to us like the downturn will continue. We don't see any increased volatility down here that would suggest a reversal,'' said Martin Klitzner, managing director at Solana Beach, Calif.-based Sunrise Capital Partners LLC, a commodity trading and advisory firm. ''We have made some money. We have been short,'' said Klitzner. A short position is a bet that prices will go down.