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

To: Karen Blankenship who wrote (25571)	7/13/1998 10:56:00 AM
From: marc chatman	Read Replies (3) \| Respond to of 95453

Regarding the days usage in storage, those figures tell me tha the issue here is not specifically low demand in Asia or warm winters. The issue is a shortage of storage facilities. Even though days usage in storage has hardly grown, the total amount in storage most certainly has grown. Heck, days usage in storage could drop and the total amount in storage could rise (assuming there is any storage left). As long as storage is full, there is nowhere to put the stuff, and the front month futures will sell off as traders dump contracts approaching the delivery date. To compound the problem, later month futures don't sell off as much. So, on the futures expiration date this month, August, the front month, could fall to $12. Of course, the oil service stocks fall with it. Then, the next day, The September contract may be trading at $14, so we get to see another month of falling prices as the September futures work there way down. And, we never see the benefit of the "artificial" $2 rise in futures as the contract rolls over. I guess the bottom line is that this is a terrible cycle, I don't know what could possibly turn the tide except for the prices to fall to zero.