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

To: upanddown who wrote (44885)	5/17/1999 5:56:00 PM
From: Broken_Clock	Read Replies (2) \| Respond to of 95453

oil got hammered a bit on access....down $.018. I understood from Noesis that OPEC production report was due out after the close today. Anybody seen the figures?

To: upanddown who wrote (44885)	5/17/1999 8:55:00 PM
From: Rob Shilling	Respond to of 95453

Time to bring up Richard Rainwater's reasons for owning oil going into 2000. His basic point was that total world-wide capacity compared to demand has been shrinking throughout the 1990s. Now, look at where we are now. OPEC has 6 mbpd excess capacity. If you believe Simmons, Non-OPEC has to struggle just to keep production level over the years. So, we will call Non-OPEC excess capacity zero. According to the IEA which is notorius for underestimating, there was 450,000 bpd drawdown world-wide prior to the recent OPEC agreement. That would mean that means that with the agreement, there is over 2 mbpd being taken from inventories, maybe more, if one thinks that the OECD inventory drawdown of 1.4 mbpd is a better number. But the point is, when inventories are deemed at "normal" levels, OPEC would have to start pumping 2 mbpd OR MORE above their current quotas to make supply and demand equal. That means world-wide there would be excess capacity of a whopping 4 mbpd or 5.3% of demand, and that is a MAXIMUM number, it could be much smaller. If Non-OPEC production falls like many are predicting and demand continues to rise, we will start getting VERY close to real Supply/Demand equilibrium.