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

To: Captain James T. Kirk who wrote (27568)	8/12/1998 9:32:00 AM
From: diana g	Read Replies (1) \| Respond to of 95453

LONDON, Aug 12 (Reuters) - World oil prices took a modest breather on Wednesday, correcting after a chilling sell-off this week saw prices plunge to fresh 10-year lows on continued worries over bulging stocks. Global benchmark Brent crude lost over a dollar this week, setting new 10-year lows at $11.55 a barrel on Tuesday as fears of oversupply coupled with poor Asian demand and unfulfilled OPEC output cuts sunk the market into gloom. Prices got a small lift on Wednesday from supportive U.S. stock data released by the American Petroleum Institute (API), but traders expected the rally to be short-lived. At 1100 GMT, benchmark Brent crude climbed 16 cents to $11.80 mainly on a larger than expected U.S. gasoline stocks drawdown. Stocks fell by 4.123 million barrels to 215.35 million in the week ending August 7, against expectations for a 1.875 million barrel drop. But they remained 24 million barrels higher than year ago levels. Crude stocks rose 1.21 million barrels to 344.74 million mainly due to a sharp fall in refinery activity, and were less than a predicted 1.75 million barrel build. The biggest build of 1.37 million barrels was in the Midwest, with a high concentration of refineries. ''The crude stocks look neutral, possibly a bit bearish given that the largest build was in the (Midwest),'' said one IPE trader. ''Gasoline should give us a brief boost. We were well oversold yesterday.'' The market continues to try to find straws to clutch on. Faith in the Organisation of the Petroleum Exporting Countries (OPEC) was seen dwindling. It was failing to meet its target of choking off output by three million bpd, according to the International Energy Agency, and a Reuters survey showed members in July were 63 percent compliant with cuts. Comments by Venezuelan Energy and Mines Minister Erwin Arrieta on Tuesday that his country had cut production by 450,000 bpd of the agreed 525,000 bpd gave prices a tiny fillip before sinking on ''realism,'' said one trader. ''I don't see the light at the end of the tunnel,'' said an economist with an OPEC country. ''Prices are pretty bad now and it's going to get worse. Even if we cut more, you still have other countries producing more and of course Iraq.'' The IEA said it was difficult to see the excessive overhang in stocks resolved until well into 1999 ''at the earliest.'' A standoff between Iraq and the United Nations Special Commission (UNSCOM) in charge of Iraq's disarmament programme could lend some support to prices but were unlikely to lift it to the safety of year-ago levels. Prakash Shah, special envoy of U.N. Secretary General Kofi Annan was due in Iraq on Thursday to discuss Baghdad's decision to halt cooperation with arms inspectors. Iraq's influential Babel newspaper on Wednesday said Baghdad would reject ''partial solutions'' and warned that it would not negotiate with the United Nations unless it lifted sweeping trade sanctions and closed all files on weapons of mass destruction.