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

To: Broken_Clock who wrote (36576)	2/2/1999 10:46:00 PM
From: Rob Shilling	Read Replies (2) \| Respond to of 95453

O.K., so we are 12 million barrels higher in crude inventory over last year in the U.S. What does that really tell us ??? Is it really due to too much pumping by OPEC ?? Or is just the "moving around" of barrels from other places in the world. Check this out: IN BRIEF: Russia Cuts Crude VILNIUS, Lithuania -- Mazheikiu, the only oil refinery in the Baltics, was forced to shut down over the weekend after Russian crude ran dry following several weeks of intensive but fruitless talks over supplies for 1999. Lithuania said Monday that it has demanded that Russia explain why it halted supplies. Refinery officials said Monday night that there was no sign yet of the crude resuming. They added that a delegation was preparing to fly to Moscow on Tuesday for more talks. Mazheikiu Nafta was last shut down due to a lack of Russian crude in February 1997, when work was stopped for two weeks. ... So Lithuania has one refinery that is bone dry, Russia is short on oil too, Nigeria is short on gasoline, Iraq is now reducing exporting to restart its refineries .... why does an API report that shows a measly 6 million barrel increase in crude oil during low refinery utilization mean anything to the price of oil ??? Probably because traders want to be lazy and only trade on numbers they know are accurate, even if they only represent a small percentage of the oil usage in the world.

To: Broken_Clock who wrote (36576)	2/3/1999 8:47:00 AM
From: SliderOnTheBlack	Read Replies (1) \| Respond to of 95453

Okay; how about some positive rational thinking from Merrill Lynch - ... the same guys who downgraded the drillers; so they could be more ''aggressively positive'' in 2H '99... here is why: * Oil Industry An Awful Year Is Over...The Outlook Is Good Investment Highlights: · The major U.S. based international oil companies have all reported earnings for the final quarter of 1998. · The stocks of the major internationals have under-performed since last summer. They have, however, weakened even further recently in response to the earnings announcements. · The stock market's strong negative reaction to the weak quarterly earnings is surprising because the weakness was widely anticipated. · There were, we believe, certain positive aspects to the fourth quarter results. In particular, the major internationals were able to earn substantial amounts of money despite extremely weak industry conditions. · The companies are intensifying their efforts to lower costs also a positive development. The upside earnings potential, once industry conditions improve, should be reinforced as a result. · The weakness in the stocks seems to be implying investor concern that conditions in the oil industry will remain weak for an extended period. ********************************************************************************* (bear trap warning !) - my caps here... · We continue to believe that the weakness we are now witnessing in the oil industry is TEMPORARY and that the longer-term outlook is QUITE POSITIVE. The corrective mechanism that will boost oil prices is, we believe, already under way. Non-OPEC production is being adversely affected by low oil prices and reduced capital spending and supplies may not rise at all this year. · In the meantime, if oil price weakness persists for another month or so, we expect that OPEC will act again to lower production. ******************************************************************************* · The continuing relative under-performance of the major international oils provides, we believe, an attractive buying opportunity for patient and value-oriented investors. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx crude supplies in the US were 353.2 million boe in May 1998; we've drawn down 19 million + boe; or 6 %. The trend is slow, but it is down. The odds are very good for either total 90% + compliance to current cuts - which will add to drawdowns, or additional new cuts from OPEC. Irregardless of new OPEC cuts; the production cutbacks, shut ins and lower drilling activity has NOT yet shown up in supply numbers; it will and it will be very substantial. Anyone who is using either math, or common sense - knows we will be ''online'' by 2H 1999. If OPEC finds religion and does not cheat upon the realization of $14-5 crude then we are home free to a steady recovery in prices. Add the Strategic Reserve purchase, even if it is 1/2 of the proposed $300 Million, and we can pull another 12.5 Million BOE out of domestic supply. The domestic supply with the US cutbacks will dramatically overshadow International Supply reductions; alltime low Rig utilization and 30-40-50% Cap Ex reductions in drilling & exploration HAVE to dramatically reduce supply - the world is not coming to an end. Once again; the powerfull equalizer; ''FEAR" will guarantee that those who tread into the ''Valley of The Shadow of Death by 1000 Cuts'' ; will profit most handsomely... One can either bet on $8 crude based upon NOESIS's ''wishywashy fence jumping mumbo jumbo'' ; or one can use simple math, and factor in conservatively the effect of dramatic cuts in upcoming drilling & production... and perhaps view potential additional OPEC cuts as only ''non-factored'' icing on the cake. Don't forget the API #'s reflect volatile refiner trends; ie: weeks ago we got a 12 million boe unexpectedly large drawdown; this was spun as year end maintenance, inventory balancing etc. Now that refiners showed a large jump in imported crude (why ?) and show an unexpected (allthough est were for up to - 6-7 m boe) rise in supply the spin can only be bearish - right ? get the point here...? Foolish to not expect refiners to keeep stocks filled with historically cheap crude. If OPEC announces new cuts - how much more $11-$12 crude will they be able to buy ? If you ran a Grocery Store and the price of Coffee looked like it could rise dramatically in coming months due to a potential producer cutback; wouldn't you buy all the cheap coffee you could and keep your storage/stock room filled to capacity ? - a little common sense here ? The sudden rise in imported crude is due to anticipated OPEC cuts. The sudden rise in imported crude led to the upper end supply increases. ...only time will tell.