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Gold/Mining/Energy : Oil & Gas Price Economics -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (87)	4/21/1999 11:09:00 AM
From: jackie	Read Replies (1) \| Respond to of 350

Ed, Noticed two points, <<Statistics do not support $20 oil or even $18 oil. They barely sustain $15 or $16 oil. We are way ahead of that. The traders anticipate and extrapolate a trend into higher and higher…Ultimately, the pendulum will swing too far.>> <<There is still oversupply, even though OPEC cut production. There is still inventory overhead. All these things have not disappeared overnight. What the market is doing is looking into the future, three to six months from now, and the market is forecasting we are going to have much more balanced supply-demand. That will push oil prices higher.>> Obviously Mr. Gheit still believes in the IEA "missing barrels" hypothesis. Should we buy into it? Notice what Matthew Simmons had to say about the "missing barrel" notion and the accuracy of IEA production and consumption figures: simmonsco-intl.com "The story gets stranger. Be cautious as you absorb these IEA numbers because they are probably wrong. The excess supplies that these IEA supply and demand numbers portray cannot be verified by any reported estimates of OECD or worldwide petroleum stocks. But, the IEA oil analysts are standing firm on their supply and demand estimates and believe, with some conviction, that we have "missing barrels" of oil stored in various exotic places around the world, though they also admit that they have not a clue where all this oil is hiding. The "Missing Barrel" issue first surfaced last April when the IEA noted that the majority of the excess supply over the previous six months had yet to show up in any reported petroleum inventories. They created the term "missing barrels" to explain what they also entitled an "Arithmetic Mystery." At the time, the amount of IEA "missing barrels" totaled about 175 million barrels. Shortly after this issue first arose, I spent some time going back over historical IEA petroleum stock reports compared to revised data several years later to convince myself that reported petroleum stocks have always been far more accurate than any supply and demand numbers. Petroleum stocks are the industry's balance sheet, which has to foot before any supply and demand estimate can be correct." Did you notice he said "reported petroleum stocks have always been far more accurate than any supply and demand numbers?" The statistics Mr. Gheit refer to are unquestionably the IEA statistics. They have unquestionably been consistently inaccurate. I think I'll stick with someone who takes a close look at the numbers, giving them the old smell test. Thank you very much for the post. It confirms the notion the conventional thinking on oil supplies is very much alive and explains why many are reluctant to invest in oil. Regards, Jack Simmons