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

To: Platter who wrote (38894)	3/4/1999 12:19:00 PM
From: Douglas V. Fant	Read Replies (1) \| Respond to of 95453

Platter, Let me mention a little secret from within the energy industry that some analysts are aware of. And that is for some reason, and this works pretty well worldwide: oil usage tracks GNP growth or decline. Don't ask me why this is, but this corollation follows. Look at the Asian economies. First their currencies tanked in 1997, then their stock markets followed. Shortly thereafter GNP declined to negative growth rates. And oil usage followed. Well in most countries now currencies have stabilized, and sure enough Asian stock markets- for the time being have begun to rally. When capital is formed-what happens?? Business tempo picks up- and the Country's GNP begins to grow anew. Now with that thought in mind- go look at the GNP projections for Asian countries for 1997, 1998, 1999, and 2000. In my mind and as I said here six months ago, OPEC or no OPEC oil prices will only begin to climb pricewise when demand for oil rises. The improvement in GNP growth rates in Asia will mean equivalent increases percentage-wise in their use of oil. Thus I'm beginning to believe that oil prices will rise based upon those Asian GNP numbers regardless of what OPEC does in March. Indeed I argue that OPEC will stand pat. Their supply cuts of 1998 along with improving Asian economies will drive oil prices higher. This raises a number of points here. First Venezuela has cut back activities to attain its reduction in oil per its 1998 Saudi-Venezuela-Mexico-Russi-Norway Agreement. Now which OS companies work in Venezuela? Expect their level of activity to be reduced somewhat. Next Asia currencies some that fell 50% in value in 1997 will begin to recover. That means two things- since oil is priced in dollrs oil will be cheaper relatively for recovering Asian economies to buy- that should spark further economic activity. Next bonds denominated in Asian currencies should show appreciation in value, if interest rates don't spike (and I don't believe they will- the current rise in interest rates/economic activity in the US is seasonal and happens every years based upon the timing of disbursements and paymenta to the IRS); lots of energy industry capital projects have been put on hold in 1998 which affects the construction sector of the OS stocks. If oil gets back to $15/bbl, expect those projects to be reinstated and initiated... Just a few rambling thoughts from a deranged mind....