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

To: Kerm Yerman who wrote (33349)	12/24/1998 9:08:00 AM
From: Tomas	Read Replies (1) \| Respond to of 95453

Slide in crude surprises all Financial Times, Thursday December 24 It has been a year of surprises for the world's oil industry, with one of the steepest slides in oil prices in recent years brought on by a global crude surplus, mild weather, Asia's economic crisis and a sharp rise in Iraqi exports. The speed at which prices deteriorated caught many in the industry off guard. At the beginning of the year some industry analysts predicted average prices of more than $19 for the year, $6 or so off the likely average of just over $13. Even in the face of the decline, some oil price bulls remained resolute in their conviction that leading exporters, such as Saudi Arabia, would not stand by and let prices linger too long at such depressed levels. In March Saudi Arabia, Mexico and Venezuela did act to restrain output when they signed the Riyadh pact. It paved the way for production cuts totalling 2.6m barrels a day by members of the Organisation of Petroleum Exporting Countries. But the cuts did not prevent prices from falling further. Earlier this week Brent Blend futures hit a fresh 12-year low of $9.55 a barrel. Saudi officials have talked about the probability of more cuts early next year. However, they want better compliance from other Opec producers before embarking on a new initiative. Many observers have been surprised that Riyadh did not act more decisively to prop up prices, given the sharp fall in its oil revenues. Some say it shows the degree of Riyadh's determination - or fear - of reassuming the mantle of the world's swing oil producer, a role it last played in the mid-1980s and one it has consistently rejected since. Others suspect it is trying to push some high-cost producers out of the market. However, given the global downturn in commodity prices across the board, the uncertain economic climate and the scale of the crude surplus, Riyadh may have concluded any sustained price recovery will be a long and slow process, largely dependent on events beyond the control of producers. The caveat would be an unforeseen and lasting supply disruption from a big oil exporter.