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Gold/Mining/Energy : Oil & Gas Price Economics -- Ignore unavailable to you. Want to Upgrade?

To: Don Crespino who wrote (6)	12/1/1998 10:42:00 AM
From: Rod Copeland	Read Replies (1) \| Respond to of 350

Let's try to look at this from the perspective of the producing OPEC countries. I have read that the only country that can produce at a profit with prices below $10/bbl is Saudi Arabia. That means that all the other OPEC nations are at breakeven or a loss. I see no way that prices can remain at today's levels for any extended period of time. It makes no sense at all. The motivation for continued selling at these prices is 1) economic survival and 2) market share. Economic survival will not be possible for any of the OPEC nations at these prices. They are almost totally dependent on oil revenues. As far as market share is concerned, the Saudi's have the hammer. They are the wealthiest (but spoiled) country and they have the reserves and production capability to wait out the other countries. Once the fact that they are truly "giving away" their finite asset base (and their future) they will trim their sails (and sales). I would not be surprised to see some kind of radical announcement from the OPEC guru's at any time. These countries are facing economic stress like never felt before. Protracted prices at these levels will lead to upheaval. They will determine a price level they feel they can live with and endure some additional pain to get the price back up to that level. One emotion stronger than greed is that of survival. Boy, I hope I'm right.

To: Don Crespino who wrote (6)	12/2/1998 6:07:00 PM
From: Ed Ajootian	Read Replies (1) \| Respond to of 350

RESEARCH ALERT - Lehman cuts '99 oil price outlook NEW YORK, Dec 2 (Reuters) - Lehman Brothers said Wednesday it lowered its 1999 oil price forecast after last week's OPEC meeting failed to result in additional production cuts. -- In a note, Lehman said the result of the meeting was not surprising. However, given ''worse than expected sentiment in the marketplace,'' it lowered its outlook on West Texas Intermediate oil to $14 per barrel from $16. -- ''Accordingly, we reduce the EPS estimates of all the integrated oil companies within our research universe,'' Lehman said. -- Kept year 2000 estimate at $16 a barrel on expectations of accelerating global oil demand and recent industrywide capital spending cuts. -- Kept natural gas price forecast at $2.25 per mmBtu for 1999, despite several negative factors, including warm weather, the collapse in oil prices and an apparent inventory overhang. -- Said a normal heating season would ''more than absorb'' the current inventory overhang. -- Lehman analyst Paul Chambers downgraded the oil services sector, in light of the challenges to the oil market. ************************************************************************* Thanks for whatever you find. This stuff is hard to take emotionally but the more I see it the more prepared I get to bolt from the oil market.