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

To: Chuzzlewit who wrote (24433)	6/20/1998 10:16:00 AM
From: Sunny	Respond to of 95453

I agree that production quotas from OPEC are not effective solutions. The OPEC countries share of the market is such that unilateral action by them alone is not sufficient to make a sizeable change in the price. Sizeable defined as large enough to immediately reverse the direction of drilling activity. One only has to travel into many of the OPEC countries to see the tremendous appetite they have for Oil Revenues and the affect low oil prices have had on them. It is almost like Venezuela turned an a dime. They have gone from a Boom in Eastern Venezuela to a Bust in terms of drillng activity as quick as I have ever seen. clearly they are not spending any more than necessary to keep the oil flowing and have abandoned or postponed a very ambitious development drilling program. Your point about storage supports my original point about small increases in price may only affect volume purchases going to the refiners. The user will not appreciably alter their behavior. The supply imbalance will not quickly correct itself and I do not think we can look for near term help from Asia. I was talking with a bit company executive and he reminded me that in the US there are far more rigs drilling for gas than oil so they are not looking for the US rig activity to crater. The next few weeks will tell. I am leaving the country for 10 days today and will not be able to maintain this dialog. I will return and perhaps have a couple of observations that will be worth sharing. Sunny