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Strategies & Market Trends : Investment in Russia and Eastern Europe -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (458)	8/18/1998 8:44:00 PM
From: Rob Shilling	Read Replies (1) \| Respond to of 1301

Salvation for emerging markets ???? Tuesday August 18, 5:40 pm Eastern Time FOCUS-Analysts see turning point for world oil glut (adds Venezuela, Mexico comments) By Richard Mably LONDON, Aug 17 (Reuters) - World oil markets may be at a turning point with a global glut beginning to subside, oil analysts said. Oil prices ticked a little lower again on Tuesday but some market watchers said they saw signs that the worst of the supply overhang might be over. Bellwether British Brent blend crude traded down four cents by 1400 GMT to $12.24 a barrel, only just above the $11.55 10-year low that oil touched last week. Worries over the nine-year high surplus of stocks that has foiled producers efforts to revive the market still outweigh the early evidence that the overhang of crude might be starting to wane. But London's Energy Market Consultants has projected that while the overall inventory picture was likely to show little change over the next month or so the market's year-on-year surplus would ease significantly. EMC said it saw July's 223 million barrel surplus of commercial oil stocks held by industrialised countries falling to 125 million barrels in October. Outright OECD industry stock levels were declining gently this year compared to a steady rise over the same period in 1997. ''Although a potential turning point the rate of price increase over the mext few months is likely to be limited,'' said EMC in a report. It said stocks when measured in terms of days of forward supply were set to come down to 61 days in October from 64 in July and compared to 60 days in October of last year. ''My impression is that we saw the price low last week,'' said a senior trader at major European oil company. ''The inventory picture is definitely looking better than just a month ago. There is light at the end of the tunnel,'' said an OPEC state oil company analyst. And tanker monitors said a big seaborne inventory of crude heading to western markets was now being drawn down. ''Oil in transit is heading south this month in a counter seasonal move which is rapidly closing the gap between this year and last,'' said consultancy Oil Movements. Saudi Arabia's decision last week to cut its crude contract sales by 18 percent, far more than its previous reductions, allayed some market scepticism that OPEC's 2.6 million barrel a day package of output cuts were being properly applied. Analysts said the Saudi move will translate into lower OPEC output and improve the group's record of compliance with pledged reductions. ''This development reinforces our view that the cumulative effect of OPEC cuts will be felt by the end of the fourth quarter in lower inventory levels and higher crude prices,'' said Jeremy Hudson of Salomon Smith Barney. Oil prices meanwhile remain stranded 35 percent under last year's average of $19.30 and many dealers see no reason to buy until there is more solid evidence that demand is beginning to outweigh supply. ''There is certainly no fear of any imminent shortage in the market,'' said a trader in London. ''People are looking at stocks ahead of winter and seeing huge amounts of heating oil squirreled away. Any immediate prospects of additional producer cuts were doused on Tuesday. Venezuela's Oil Minister Erwin Arrieta and his Mexican counterpart Luis Tellez said they would meet with Saudi Arabia's Ali al-Naimi later in August. But both ministers said further supply cuts would not be on the agenda. Prices in dollars per barrel: Aug 18 Aug 17 (1400 GMT) (close) IPE October Brent 12.24 12.28 NYMEX September light crude 13.10 13.20 Related News Categories: international Copyright c 1998 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon See our Important Disclaimers and Legal Information.