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To: Norman H. Hostetler who wrote (10369)	1/6/1999 9:31:00 AM
From: Charles A. King	Read Replies (2) \| Respond to of 13091

Oil prices in general will stay low until OPEC members decide to act together again as they did last year. Recent talks fell apart when Iran said it would make further cuts based on 3.9 million barrels a day rather than the 3.6 million barrels a day that it was capable of pumping. Iran said the higher figure was what it was entitled to operate at based on the agreement of October 1997 when Saudi Arabia said it wanted to increase pumping by 10% instead of cutting it. Maybe Saudi Arabia could see the coming glut of oil and wanted to make a grab for market share at the expense of other countries who weren't able to achieve the 10% increase. Even though Iran wasn't able to increase production by 10% at that time, it still wants to use the higher level as a basis. Norway and Mexico were involved in recent talks to make further cuts, but now there appears to be a stalemate. I believe the next scheduled OPEC meeting isn't until March 23. Iraq is allowed by the UN to ship $5.3 billion worth of oil every 6 months for humanitarian purposes. As the price of oil drops, Iraq is allowed to export more oil, further depressing the price. Crude reached $16 in September but is now $12 after averaging around $11.24 in December. If OPEC, Norway, and Mexico could have been successful at making further cuts, the plant probably could make money now if it was operating. One might ask why the recent cold weather hasn't boosted distillate prices. The reason is that storage of heating oil is huge throughout the world and refiners keep their tanks full at these bargain prices. NEW YORK (Reuters) - Oil prices closed lower Tuesday ahead of a weekly report on oil usage and stockpiles with traders shrugging off the recent surge in heating demand in the United States and pointed to swollen world supply. In other commodity markets, hog and corn prices soared on cold weather concerns while coffee prices dropped on supply. At the New York Mercantile Exchange, crude oil for February delivery closed 35 cents lower at $11.99 a barrel. February heating oil fell 0.92 cent a gallon at 34.22 cents and February gasoline closed 1.17 cents a gallon lower at 36.35 cents. ''The market's long-term view is that supply is going to outpace demand and this continues to give the market a bearish tone,'' said analyst Joe Posillico at trading house E.D. & F. Man International. The market has largely ignored the latest tensions over Iraq's no-fly zones, he said, as it has not affected Iraq's capacity to export oil. Iraq was reported Monday to have raised its January oil export schedule beyond two million barrels a day as it pushes sales to post-Gulf War highs. That adds to already huge headaches among other members of the Organization of Petroleum Exporting Countries, which has failed to come to agreement on any significant cuts to daily oil exports. Many OPEC members are strapped for cash and want top exporters like Saudi Arabia to cut back more. Weather forecasts indicated that the U.S. Northeast, the top heating oil consuming region, will remain colder than normal until late this week. ''We have so much heating oil that even three weeks of weather like this will not cause a shortage,'' said Posillico. dailynews.yahoo.com