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

To: RGinPG who wrote (31926)	11/18/1998 12:25:00 PM
From: The Ox	Read Replies (1) \| Respond to of 95453

There's more downside then the bulls want to face..... OPEC cornered as oil slump hits new low By Richard Mably LONDON, Nov 18 (Reuters) - OPEC oil producers on Wednesday were left cornered by crude prices at 12-year lows just days ahead of a ministerial meeting which appeared unlikely to offer any new solutions to a deepening oil market crisis. Benchmark Brent crude futures set an all-time contract low of $11.20 a barrel in early business on Wednesday before recovering slightly to $11.54. Oil has not been as low since the depths of the 1986 price crash when Brent slipped below $9 a barrel and on average this year, at $13.70, is running lower than at any time since 1976. Organisation of the Petroleum Exporting Countries ministers gathering next week in Vienna appear helpless to react to one of the worst oil price slumps in history. ''If the expectation is to cut more, maybe it is too much for OPEC to handle that,'' Sayed Mehdi Hosseini, Iran's deputy oil minister for international affairs told the annual Oil and Money conference in London on Wednesday. ''At present additional output curtailment by producers does not appear feasible,'' added Adrian Lajous, the head of Mexico's state oil company Petroleos Mexicanos on Wednesday. Non-OPEC Mexico played a crucial role earlier this year in helping orchestrate with OPEC two rounds of output cuts taking some three million barrels a day of supply from the market. ''Facing a massive stock overhang and weak demand there is not much more OPEC can do these days,'' said London's Centre for Global Energy Studies. OPEC has watched its efforts this year to rescue the market ruined by a towering stockpile of crude and petroleum products and failing demand, in particular from Asian consumers. OPEC's Vienna secretariat said on Tuesday that world oil stocks on the 75 million barrels daily market had built by more than two million bpd in the first nine months of this year after a 1.1 million bpd stockbuild in 1997. The Organisation for Economic Cooperation and Development, in a review of global economies, said the prospects for an Asian recovery had been delayed until the end of 1999. Having already cut supply this year by 10 percent and made no impact on prices, oil producers are in poor shape to take further action. Some OPEC countries like Kuwait want immediate further output cuts but a meeting of ministers on the fringes of a conference in Cape Town two weeks ago signalled only the likely extension of reductions already agreed. ''Under these conditions a rollover seems to be the preferred option,'' Pemex's Lajous told the annual Oil and Money conference in London on Wednesday. ''If you can't fix it, don't make it worse,'' added a senior Gulf OPEC official. Industry monitors say OPEC is close to its stated aim of removing 2.6 million barrels a day but familiar cracks have appeared in recent weeks as member countries point the finger of blame at those allegedly not meeting pledged supply cuts. Saudi Arabia, in control of nearly a third of OPEC exports, has called for full compliance amid signs that it remains unhappy with the performance of rival producers like Iran and Venezuela. December presidential elections in Venezuela mean Caracas would appear unable to consider any further action. Mexico on Wednesday added its warning to those producers which might be tempted to infringe output curbs. ''The continued support of Mexico to the management of global supply is conditional to effective compliance by other major producers and to the stability of market shares in our main export markets,'' Lajous said. Oil traders see no relief for a market where the stubborn stockpile still blocks the road to recovery. ''There is no fundamental reason to buy this market at the moment,'' said Darren Gurner at trading house Sucden.