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: marc chatman who wrote (42544)	4/18/1999 6:29:00 PM
From: Rob Shilling	Read Replies (2) \| Respond to of 95453

marc, the reason I say drilling may be less volatile in the future because I am subscribing to the theory that supply/demand for oil will be very tight for several years to come. In the past, drilling has gone from boom to bust when OPEC started pumping more oil than the world needed. Most of the media keeps pointing to OPEC eventually "screwing up". OPEC could "screw up" in 1990 when excess supply around the world was 15 mbpd. Today it is only 6 mbpd and shrinking. Pretty soon we will be constantly fighting to keep supply up with demand IMHO. Try this math out, I still have never gotten much feedback on this math: OPEC Supply in September of 1998 27.3 mbpd (over 80% compliance) OPEC Supply with new agreement 27.3 - (1.7*.8) = 26 mbpd at 80% compliance: Non-OPEC supply 44.0 Total Supply 70.0 Forecast 1999 demand: 75.5 Of course some of the Non-OPEC supply and the demand numbers vary a little depending on what source. But one gets a 5.5 mbpd gap here. You can add to this the fact that Non-OPEC supply is probably overstated. I have seen IEA numbers revised after September that, as I recall, point to something like 42 mbpd. With the shutins and depletion everyone is talking about, I don't doubt this number or even a lower number. But using 42 mbpd, that would give us a 7.5 mbpd gap!!! And this does not show some of the non-OPEC voluntary cuts of 400,000 bpd. --- Maybe I am wrong here somehow, I would appreciate someone to show me where. I don't really understand the liquified natural gas and how it enters the equation (if it does). But the bottom line here is that current demand right now looks to be supplied with a large amount of inventory drawdown. 1999 is bound to show us how much overhang we really have, because by the end of 1999 with these type of numbers, we will be eliminating the overhang very fast.