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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sergio H who wrote (2042)	3/22/1998 3:39:00 PM
From: Magnatizer	Read Replies (1) \| Respond to of 29382

Amigos y Amigas good news in the oil sector for those who do not know yet To: Options Jerry (6360 ) From: Teddy Sunday, Mar 22 1998 1:57PM EST Reply # of 6370 O Jerry, i'll see your re-paste and up you one: Sunday March 22, 12:56 pm Eastern Time Oil price set to leap on news of major output cuts By Richard Mably LONDON, March 22 (Reuters) - World oil prices are set to jump sharply when the market reopens on Monday after a trio of oil producers on Sunday announced a surprise package of supply reductions. Analysts and traders said that a pact struck in the Saudi capital Riyadh after secret talks would immediately add a dollar a barrel to the price of oil and quite possibly more in the short term. They said that the size and durability of the price rise would depend on the producers' ability to deliver on a pact aimed at cutting up to two million barrels a day (bpd) from the world market. ''A cut of two million bpd will get Brent back up to the $16 a barrel level,'' said analyst Mehdi Varzi at Dresdner Kleinwort Benson ''But they will need two million to restore confidence in the market place particuarly given the prospect of extra Iraqi exports.'' Benchmark Brent blend crude ended trade on Friday at $13.27 a barrel, having recovered from a nine-year low below $12 amid rumours of secret consultations to secure production cuts. Brent averaged $19.30 last year. Analysts said the agreement will help repair the damage done to oil markets by the Organisation of the Petroleum Exporting Countries (OPEC) in December when it raised member country supply limits by ten percent to 27.5 million bpd. ''It looks as if OPEC has made itself whole again,'' said Peter Gignoux of Saloman Smith Barney. ''There was obviously a realisation that things had gotten out of hand.'' The meeting in Riyadh over the weekend between OPEC producers Saudi Arabia and Venezuela and non-OPEC Mexico reached an agreement to undertake an effort with other producers to withdraw a total of 1.6 to 2.0 million barrels daily from the 75 million bpd global market. Oil ministers from the three countries said they already had a commitment for 1.1 million of cuts and said details of the full reduction would be released after further meetings with other oil nations in coming days. The supply cuts come into effect from April 1 effective to the end of the year. Bob Finch, head of trading at Vitol, said the 1.1 million commitment would be enough immediately to add a dollar a barrel to oil prices. ''There's probably a $1 a barrel in it,'' assuming a cut of 1.1 million bpd,'' said Finch.''But if they get a cut of two million we could see prices up $2,'' said Finch. As details of the Riyadh pact emerged on Sunday, Saudi Arabia promised to slash 300,000 barrels a day (bpd) from current supplies estimated at 8.7 million. Mexico's Energy Ministry said it would order a 100,000 bpd supply cut and added that Venezuela had made a commitment to reduce its sales by 200,000 bpd. Kuwait's Oil Minister Issa al-Mazidi weighed in with a 125,000 bpd contribution and Algeria with 50,000 bpd. Other Gulf OPEC producers the United Arab Emirates and Qatar were also expected to cooperate although there was no immediate confirmation. There was no word from Nigeria which, with Venezuela and Qatar, has long been fingered in OPEC as the cartel's biggest violator of official quotas. Non-OPEC Oman, which had already volunteered cooperation, welcomed the deal and is expected to confirm it will about 40,000 bpd. Norway, also a major producer outside OPEC, kept its options open saying it had made no commitment to an output cut as part of the pact but did not exclude the possibility and was ''positively awaiting developments.'' Producers like Britain and the United States, where oil sectors are run entirely by commercial firms rather than state oil companies, will not participate. (BTW, Jerry, along time ago Truff told me that if i wanted to learn something i should watch you. She was right.) ht david