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

To: The Ox who wrote (32274)	11/30/1998 4:48:00 PM
From: Rob Shilling	Read Replies (1) \| Respond to of 95453

I guess I really don't get it now (or maybe I do). At the current price of oil, only low cost suppliers like OPEC and a few other non-north America oil producers could be actually making a profit by producing. Everybody else is losing money. Yet, according to CNBC, OPEC is the loser? Even though countries like Saudi Arabia have huge budget deficits because of the low oil prices, at least it is still worth it to pump oil out of the ground for them. How many other oil producers can say that at current prices?? Look at the flip side of the coin. Seven year forecasts of low oil prices makes it a lot easier for Exxon and Mobil to merge (avoid antitrust). Also, low oil prices help the American economy (big importer of oil) as it currently slowing down. It is all "spin" IMHO. The infamous IEA WSJ story that came out on a Tuesday a while back proceeded to make a case for lower oil prices, yet if you took the numbers for OPEC and Non-OPEC supply and forecasted demand in that article, you get a 2.5 mbpd drawdown that has been going on since September of 1998 and is forecasted to continue into 1999. Also, lost production due to natural events or sabotage is not factored in, but 150,000 bpd of cheating by Venezuela is factored in. The, main quantity quoted for the number of barrels in world-wide supply is: "there is a lot of oil out there". They can't even find the 300 million "phantom barrels". You have to ask yourself, after all the doom and gloom forecasts and the current record setting low oil prices, how much oil is shut in and will be shut in soon? Economically, it should be every well in the U.S. for starters. It is funny how this side of the coin is not reported. Let the traders ignore the facts. That just means that the next bounce back in oil prices will be because of a real oil shortage, and not an OPEC manipulated one, which gives OPEC and other low cost producers the upper hand on the world.