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

To: marc chatman who wrote (25496)	7/10/1998 9:52:00 PM
From: Elmer	Read Replies (3) \| Respond to of 95453

I talked to a energy analyst at one of the sell-side firms today and was told that while statistics of crude oil inventories in Asia are usually released with a two month lag, he has heard from some of the larger oil companies that Asia has been allowing their crude oil inventories dwindle by not replacing storage. The majors are expecting Asia to at least build inventories a little bit this fall. He also mentioned the Cross Timbers press release and how the inventory situation is no where near as bad as people are saying. I feel it's like a feeding frenzy. Traders who keep selling oil futures keep saying we have an inventory glut. But I look at API inventories (like Cross Timbers astutely highlighted) versus historical numbers and I ask: "what glut?" In the 1980's, API crude oil inventories averaged around 27.5 days. As of the most recent API numbers, the stat is 23.6 days. This is only 1.1 days higher than July 1997. Six weeks ago, inventories were 45 million barrels ahead of last year. Last Tuesday's API numbers were only 18 million barrels higher than the prior year number. All of this before the July 1 cuts were implemented. Sure absolute crude oil inventories are higher than they have been historically, but so is demand. Shouldn't days inventory be the statistic everyone should focus on. Analogy: Shareholders of a company don't care as much about absolute net income nearly as much as they do about EPS. What in the hell am I missing???? Help me out. Look forward to some feedback, Elmer