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To: Douglas V. Fant who wrote (37789)	2/18/1999 5:30:00 PM
From: Platter	Respond to of 95453

Feb 18 (Reuters) - Oil raced off recent lows on Thursday following indications of easing supply in the pivotal U.S. market. International benchmark Brent blend closed 50 cents higher at $10.63 a barrel in London, now over a dollar up on historic lows plumbed in December. North Sea Brent so far this year has averaged a paltry $10.80 after slumping to $13.30 last year from $19.30 in 1997. Support came on Thursday from a U.S. Department of Energy (DOE) report of a 1.7 million barrel draw in U.S. crude oil inventories last week, contradicting overnight figures from the American Petroleum Institute (API) which showed an 2.6 million barrel inventory build. The upward price move followed Brent's Wednesday slide below $10 a barrel for the first time in two months as huge stocks of unwanted oil intensified pressure on producers in OPEC to agree on new output cuts at a March 23 ministerial meeting. Venezuelan oil industry sources said on Thursday that the key OPEC producer is still pumping about 110,000 barrels per day (bpd) above its agreed production level, but expects to comply fully with OPEC austerity measures by March 1. "The order has been given and they are working on the cuts," said one industry source familiar with the issue, asking not to be named. Venezuela's new President Hugo Chavez has vowed to abide by the previous administration's agreement with other OPEC members to cut output, but senior government figures have issued conflicting statements about exactly when this would happen. "They have cut, but they still have to cut a few more barrels, a little more than 100,000 bpd," said another source. "They will do it and it has to be done by March 1," he added. Just a month ahead of its key meeting in Vienna, OPEC remains split on whether to reduce supply again in an effort to rebalance the market. Cartel kingpin Saudi Arabia has complained that rival members have yet to implement supply curbs agreed last year. The Saudis and other major producers like non-OPEC Mexico and Norway insist on full compliance by all suppliers with last year's three million barrels a day (bpd) package of output cuts before they consider new measures. OPEC's Vienna-based Secretariat said on Tuesday that independent monitors reported OPEC supply increased in January by 280,000 bpd to 27.47 million.

To: Douglas V. Fant who wrote (37789)	2/18/1999 5:38:00 PM
From: Platter	Respond to of 95453

NEW YORK, Feb 18 (Reuters) - Crude oil and refined products futures on the New York Mercantile Exchange ended sharply higher Thursday as market talk of more refinery cuts added fuel to a buildup in shortcovering late in the session, traders said. The rumors about additional refinery cuts involving Tosco Corp.'s refineries in the East Coast hit the NYMEX trading floor in the late afternoon, leading to a surge in gasoline futures, traders said. "That carried the rest of the market, just as a lot of players were covering short positions," said Jim Ritterbusch, a trader for Chicago-based Sweeney Oil. March crude futures, which expire on Monday, settled at $12.04 a barrel, a gain of 51 cents, after last trading at $11.98. The contract shot up to $12.19 near the close. In the morning, it dipped to a session low of $11.44. Front month crude last settled above $12 on February 4, when it ended at $12.02. April crude ended sharply up at $12.17, up 54 cents, due in part to players rolling March positions to April. The session-leading March gasoline contract ended at 34.42 cents a gallon, jumping 1.35 cents after trading in the last minute at 34.40 cents. The contract traded as high as 34.90 cents. In the morning trade, it slipped to a session low of 32.95 cents. Gasoline forward months also posted heavy gains of more than 1.00 cent. Front month heating oil gained 1.14 cent to end at 30.98 cents a gallon, after shooting up to a session high of 31.70 cents. The contract fell in early trade to 29.50 cents. "The market has been under pressure lately, with a lot of shorts opened on Tuesday, when the selling caused a sharp fall on crude futures," noted senior analyst Tim Evans of Pegasus Econometric Group. Crude futures volume on Tuesday was at a heavy 142,332 contracts, pushing the open interest to an all-time high of 551,346 contracts, according to NYMEX. Conflicting industry and government weekly data on crude inventories caused NYMEX crude to wobble at the opening. The American Petroleum Institute (API) reported a 2.56 million barrel build in crude stocks for the week ended Feb. 12. But the U.S. Department of Energy reported a draw of 1.7 million barrels. About midmorning, however, the bulls got the upperhand and crude began rising, supported by the DOE crude draw. Both API and DOE data showed almost identical build of about 400,000 barrels in distillate stocks, which include heating oil. On gasoline, the API reported a draw of 1.1 million barrels and the DOE, a drop of 2.2 million barrels. NYMEX traders said several other reports in the afternoon served to fuel buying interest, including a report that BP Alaska, an arm of oil giant BP Amoco Plc, was expecting further declines in oil production, although a company spokeswoman did cite figures, said Tom Bentz, an analyst at Cresvale International. News that Venezuela expected to fully comply with its pledge to cut production by 525,000 barrels per day (bpd) was also supportive, said Peter Beutel of Cameron Hanover. "The talk about refinery cuts was a weak fundamental story and doesn't seem compelling," noted Evans of Pegasus. "A lot of people may be skeptical about today's advance and fight the rally, but then again, others may decide it is more practical to go with the flow," he added.

To: Douglas V. Fant who wrote (37789)	2/18/1999 6:58:00 PM
From: JungleInvestor	Read Replies (2) \| Respond to of 95453

Doug, There is a good reason why oil and gold both go up or down at the same time - the money supply. When money supply is growing fast, there are more dollars to buy the same quantity of gold or oil. Gold, oil and the CRB are all good indicators of future inflation. My guess is that sometime in the second half of the year inflation will be signficantly higher (i.e., due to interest rate cuts last year, IMF bailouts, etc.). So the price of oil is dependent on two different factors supply/demand for oil and money supply growth.