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

To: dfloydr who wrote (42162)	4/13/1999 7:12:00 PM
From: Broken_Clock	Read Replies (1) \| Respond to of 95453

CRUDE OIL PRICES "Prices of crude oil continue to drift upward, although the rate of increase has begun to slow down. Everyone is waiting now to see if OPEC will really reduce output. If they hold to their quotas and reduce production by 3.5 million bpd, it will take about 3 months for the world to use up the crude oil currently in storage before refiners will be forced to bid up the price of crude oil, assuming non OPEC sources do not increase production. However, if the price of crude oil remains at the current level, it is likely that some non OPEC production will come back on line, which will extend the time it will take to whittle down all of the oil in storage. The end result is that there is no shortage of crude oil and it will be months before we really know if OPEC is successful in bringing down supply to equal demand, which is when control of crude oil prices will shift from the refiners to the producers. To complicate matters, U.S. inventories of crude oil are pretty high. Continued filling can result in a peak period when refiners are forced to drop import rates. When they can't store any more oil, they won't purchase oil on the spot market, and they will post lower prices for the crude oil they will consider buying. This chain of events tends to drive the market price for crude oil down.. The key to avoiding this situation is for the U.S. to maintain imports at about 8.3 million bbls. But in a free market, no one really has this kind of control! So, watch imports and crude oil tank fill rates to determine which way the price of crude oil will go." Last two weeks, Noesis has been predicting that since total US oil storage was nearly full, if refiners wanted to, they could top off storage fairly quickly and thereby force prices back down. Looks like that is their intention to me.