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Strategies & Market Trends : Investment in Russia and Eastern Europe -- Ignore unavailable to you. Want to Upgrade?

To: Paul Berliner who wrote (885)	1/6/1999 1:52:00 PM
From: Rob Shilling	Read Replies (4) \| Respond to of 1301

Paul, Paul, Paul ... have you been listening to CNBC hype ??? The "glut" is not necessarily a fact. I will tell you a few facts though that may make you think about the possibilities of oil prices: 1) In 1990 there was 18 million bpd excess capacity world-wide and demand was 57 mbpd. Today there is 5-6 million bpd excess capacity and demand is 75 mbpd. I see a trend, do you ??? 2) Non-Opec supply has been decimated by a year's worth of low oil prices. Rationality has to set in for high cost producers at some point and force them to stop pumping at a loss 3) Future exploration has been hurt badly by the low oil prices. Witness the recent reduction of capital spending of major oil companies. 4) Demand grows with world economies. If GNP of the world grows at the expected 1.8% this year, oil demand will rise over 1 million bpd this year. If you factor in a full blown recovery for asia in the second half of 1999, demand could grow even faster. 5) OPEC is cutting now. From the IEA's own numbers, there is currently a world-wide drawdown of 5-6 million bpd thanks to OPEC cuts and non-OPEC shut-ins. The only question is whether oil prices will go up before there are true shortages. If the market refuses to price in the data I have shown here, then we will have to wait until there are actual shortages to get higher oil prices (long gas lines, whatever). Note, none of these factor in OPEC shenanigns, war in the mid-east, etc. ... The U.S. does not want higher oil prices because the U.S. is a HUGE net importer and because the U.S. has a HUGE bubble stock market. Thus the constant negative oil price spin in the face of facts. BTW, API statistics showed a 15 million barrel drawdown in U.S. storage last week. .... If oil goes higher .... buy Russia, buy as much as you can !!!