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

To: Gameboy who wrote (27082)	8/5/1998 10:35:00 AM
From: dmccoach	Read Replies (2) \| Respond to of 95453

FGII getting killed and of course I hold it... Mr. Big, why did you spread that doubt? Anything else going on here that I probably don't know about? Thanks, Dan

To: Gameboy who wrote (27082)	8/5/1998 10:03:00 PM
From: Gameboy	Read Replies (3) \| Respond to of 95453

Oil Glut Myths 1) MYTH: Because of the Asian Crisis, the world is using a lot less oil in 1998 than in 1997. REALITY: The worldwide demand for oil will increase by 1.2 million barrels/day in 1998 from 1997. Without the Asian Crisis demand would have been 1.5 million barrels/day more in 1998 from 1997. 2) MYTH: OPEC has been helpless in raising the price of oil by production cuts. REALITY: In July, because of OPEC production cuts, the price received by OPEC countries as a whole increased in 3 weeks from $10.56 for the week ending July 10th to $11.55 for the week ending July 31st - an increase of 9.4%. 3) MYTH: The US is getting choked on cheap oil that is causing inventory levels to swell to 343 million barrels of oil. REALITY: Nobody is forcing US refineries to buy oil - they are hoarding all they can store and process because they know they'll never again see prices this low. US costs for oil have risen from $11.37 week ending July 10 to $12.27 week ending July 31st. Next week they'll be still higher. 4) MYTH: The price of oil is falling and will eventually go down to $8.50/barrel. REALITY: Beginning July 3rd, the weekly total world fob port of lading, price of oil has tracked $11.00, $11.17, $11.30, $11.49, to $11.90 week ending July 31st. The weekly increase in the price of oil is accelerating. 5) MYTH: The US has such an excess supply of oil that it would take at least 6 months to a year to deplete. REALITY: Without daily inputs, the US refineries would exhaust their existing supplies within 23 days. They are storing about 30 million barrels more that last year however legislation has already passed the US Senate to purchase 28 million barrels of oil for the Strategic Reserve Supply that would virtually wipe out this extra supply. 6) MYTH: If sanctions are lifted, Iraq will flood the market with oil. REALITY: Iraq is already selling more than they can produce - they are drawing down existing supplies. Without badly needed parts and repairs, they are months away from increasing production. 7) MYTH: It will be month's before oil goes back to $16/barrel. REALITY: At the accelerating rate of the price of oil, the total world price of oil will be around $12.50/barrel for the week ending August 7th. A week later, week ending August 14th, the total world price of oil should exceed $13.00/barrel fob port of lading - the comparable futures price of US oil would probably exceed $16.00 at that time although it must be remembered the futures price isn't a 'real' price but a speculator's price that can swing widely from day to day. 8) MYTH: OPEC would be hard pressed to make additional, unexpected cuts at this time. REALITY: Several of the OPEC countries have already stated that they are forming a new group of oil producing countries whose goal, like central banks, is to make sudden, unexpected moves to shore up the value of oil and throw off speculators - thus gaining more control over the price of oil. Already in July, they've profited handsomely from their 3 million barrels/day cuts. For any future oil production cuts they make, they know they'll reap profit in multiples. The next cut could always come tomorrow. Best of luck, Steve