Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: SargeK who wrote (39924)	3/14/1999 4:13:00 PM
From: Crimson Ghost	Respond to of 95453

The TIMES OF LONDON says that somewhat higher oil prices would benefit the global economy on balance and wishes OPEC well. Saudis hope for third time lucky The Times of London Saudi Arabia has persuaded other leading oil exporters to cut output three times in 12 months. Until now, these attempts to shore up the sagging crude price have been two-month wonders, as sure a sign of desperation as another bout of merger talks between Enterprise Oil and Lasmo. Maybe it will be third time lucky. Like the oil explorers' response to their plight, however, the unusually wide agreement among oil producers may signal that the market is turning. The latest effort shows careful groundwork. The Saudis won a thumbs-up from the Gulf states first. Then they brought together three of the traditionally most difficult cartel members. Yesterday they emerged with a commitment to cut more than two million barrels per day to take to a meeting of Opec in ten days' time. The Saudis may well take the brunt of the cut, bringing their own output below eight million barrels a day for the first time since the Gulf War. The key contribution of many of the others will be not to take advantage by filling the gap. The suggested cut is about 8 per cent of Opec output but only about 3 per cent of world output. Mexico's Pemex, which is not in Opec but helped before, is again on board. There are even hints of help from Norway's Statoil. The immediate aim is to eliminate excess stocks built up over another unhelpful winter. The conspirators then hope to push the price of Brent crude up from $13 to $18 per barrel ahead of next winter. That would be the highest price since the autumn of 1997, when the Asian crash was beginning to cut demand. Even in its heyday Opec could hold the world to ransom only if it was pushing in the same direction as market forces. This is doubly true 28 years after it first precipitated a world recession. If key exporters have to make big cuts to win small rises in price, the exercise soon breaks down. There are some signs in the Saudis' favour this time. The behaviour of market prices suggests that they reached their low point in the cycle at $9.55 per barrel in December. The trend since then has been upwards. Unusually, it may also be in the general interest if this collaborative price-fixing, which would be illegal in the EU or America, were to succeed in moderation. Russia, Indonesia and Central America need a higher price to stop dragging the world towards recession. For once, spending a little more on oil could save Western consumers a lot of money. It could even save Lasmo again. (Copyright Times Newspapers Ltd, 1999) _____via IntellX_____ Publication Date: March 13, 1999 Powered by NewsReal's IndustryWatch ...back to top