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

To: Alan Brezin who wrote (62)	1/13/1999 9:11:00 PM
From: Ed Ajootian	Respond to of 350

Crude Oil During the last two weeks of December refiners were successful in drawing down crude oil inventories from 339.7 to 321.8 million barrels. Refiners pulled the level of inventories down by reducing crude oil imports by 1.4 million barrels per day while simultaenously increasing input to crude stills from 14.7 to 15.4 million barrels per day, or 98.2 percent of capacity. (If demand is steady, those changes alone account for 14.7 million barrels in 7 days). The extremely cold weather that swept across the nation during the last two weeks of the year allowed refiners to deliver just enough heating oil from their tanks to make the higher refining rates possible. The draw down allows the oil companies pay less taxes on inventories. It is also occurred when the cost of replacement crude oil was the lowest of the year, thus refiners have an opportunity to refill their storage tanks with less expensive crude oil. This last minute manipulation of inventories and refining rates should not be mistaken for change in the trend of refining operations. There will be a short period of refilling crude oil tanks, but refining rates will go back down. Demand for crude oil and refined products is almost always the lowest during February, which is also the month most refinery maintenance occurs. Demand for crude oil is not expected to pick up significantly until March. Even though the weather was cold, refiners made more distillate than consumers used, so they still have extremely high inventories of distillate. The total amount on hand increased to 153.9 million barrels -- the highest level of the year. Gasoline inventories remain lower than last year at 210.8 million barrels, but are adequate going into the spring season. A slow down in refining rates will help bring down the distillate levels, but could result in a shortage of gasoline made by U.S. refineries. The temperature in the Northeast and Midwest is critical because cold weather will help increase demand for heating oil (distillate) and will reduce demand for gasoline. Without increased demand for distillate, refiners and wholesalers may be dependent on imports to meet the spring demand for gasoline because they will not be able to run the refineries at high enough rates. (see "background tips"). W orld crude oil prices reported by EIA as of January 1, 1999: Saudi Arabian Lt (34 API) - $10.03, Nigerian Bonny Light (37 API) - $10.06, UK Brent (38 API) - $10.44, and Mexico Maya (22 API) - $6.38. ****************************************************************************** From the Noesis site. Looks like oil is headed back to the single digits. Posted prices for crude oil as of January 10, 1999 were: Scurlock, West Texas Intermediate (WTI), $10.50; Louisiana Lt. Sweet Onshore $10.00, Oklahoma Sweet $10.50; Kern River (13 API) $7.50; Alaska North Slope (28 API) $11.07; and Kettleman Hill (34 API) $9.45(Avg)