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To: SargeK who wrote (37716)	2/18/1999 11:21:00 AM
From: Mike from La.	Read Replies (1) \| Respond to of 95453

Watch February 18, 1999 Crude stocks were down 1.7 million barrels (MMB) at 331.7 MMB on February 12, 1999, due to increased crude inputs and lowered crude production. Inputs rose to 14.6 million barrels per day on boosts by refiners in PADDs II and III. In PADD III, input gained 0.3 million barrels per day (MMBD) to 6.9 MMBD. Several refiners are completing turnaround actions this week. On February 12, there was a brief uptick in the closing spot price of WTI-Cushing crude, which ended the day at $11.90, as other prices headed lower. The estimated world price of a barrel of crude was $9.47, matching the U.S. price. A year ago, those prices were $13.04 and $13.31, respectively. Reflecting the sharply lower prices for crude oil, this week the EIA estimated crude oil production at barely 6.1 MMBD after averaging 6.4 MMBD previously. Part of that decline was also attributed to decreased production in Alaska when the TAPS pipeline and storage at Valdez were full. Shipping in and out of West Coast and Alaskan ports has been affected by weather. Is the most important part of this report that although imports increased, overall storage decreased DUE TO DECREASED PRODUCTION? Are we finally seeing the results of the shut-inss and cut budgets? If so, it may the the start of a trend that will continue and gain momentum as the full effects make themselves felt. Mike from La.

To: SargeK who wrote (37716)	2/18/1999 11:44:00 AM
From: Think4Yourself	Read Replies (1) \| Respond to of 95453

SargeK, your statement confused me. Can you please explain your logic? "Recent actions by the U.S. to add to the SPR and lease space to the producers add tangible evidence that we are on board to reduce marketable inventories and stabilize prices at a loftier levels." My take is that this will worsen the situation because we have postponed the inevitable price dive until after the March meeting. When there is no more storage for products, that restricts the amount of oil that can be bought (i.e. less demand) and decreases the price. The ONLY thing that will make the bickering OPEC nations cooperate is the hit in their pocketbooks. They WERE going to take that hit in the next month, but now "relief" (which actually means shooting themselves in the foot) is only a few months away. In other words, they have LESS incentive to cooperate in the March meeting. Also, that oil space leased in the SPR is not PART of the SPR. It is therefore supply (subject to potential access window restrictions), just as if it were in the refiners tanks. Is my logic flawed? If so how? Thanks! Ken