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

To: diana g who wrote (23046)	5/30/1998 1:26:00 AM
From: Czechsinthemail	Respond to of 95453

diana, I think the back channel discussions regarding possible OPEC cutbacks are no doubt occurring, but I don't think they are trying to jawbone prices down. I think they have been trying to jawbone prices up by hinting at further production cuts, suggesting the market demand will strengthen, etc. The threat of OPEC cuts has kept oil markets somewhat more buoyant than they would be otherwise. What OPEC would like is for oil prices to go back up without further cuts. Unless there is a supply disruption in Iraq, I think the chances of this are slim. The oversupply of oil will force their hand to cut back production. They probably won't get an agreement worked out and announced much before the June 24 meeting, because the low oil prices are what drive OPEC and non-OPEC producers to make the necessary concessions for the agreement. However, I agree with your conclusion that oil prices get bid up largely on short covering around concerns that there might be some kind of weekend announcement. Without it, oil prices will likely return to their downtrend next week. Whether drillers and service companies go down or not will likely depend on whether they are being seen as bargain stocks that will eventually go up when an OPEC agreement gets announced, or as vulnerable stocks getting weaker as oil prices drop. I suspect they will drop with crude, particularly if the overall market environment stays on the defensive. Baird