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

To: Robert T. Quasius who wrote (44966)	5/18/1999 9:45:00 PM
From: Captain James T. Kirk	Respond to of 95453

May 18, 7:52 pm Eastern Time FOCUS-Oil reversal deepens, drawing OPEC warning (Updates with closing prices) By Richard Mably LONDON, May 18 (Reuters) - Oil prices drifted lower again on Tuesday as dealers stayed cool on a market which they said had rallied too strongly for its own good in recent weeks. Benchmark Brent blend crude oil for July last traded 68 cents lower at $15.13 a barrel in London, after touching a low of $15.03, Brent's lowest value in a month. Dealers said the market, which has dipped from a peak two weeks ago of more than $17, was weakened by an overhang of petroleum products in Europe and the United States that has hit refinery profit margins, signalling lower demand for crude oil. ''Very poor margins are causing refinery crude runs to be cut,'' said Nauman Barakat at brokerage Prudential Bache in New York. ''Either products have to go higher or crude lower and demand at the moment doesn't look strong enough to lift products.'' Petroleum product supplies in the West have been bolstered by unexpectedly high exports from Russia where falling domestic demand and a weak rouble have freed more oil for sale abroad. U.S. traders said on Monday that a European glut of Russian heating oil had spilled over into the United States at an unusual time of year for imports from Russia. Traders in London said the weak prices had pushed out of oil some of the speculators who had invested in the oil market since OPEC in March agreed new supply curbs. That had taken the shine off the price rally which lifted Brent from less than $10 in February, drawing a warning on Tuesday from OPEC President Youssef Yousfi. ''The supply-demand balance remains precarious. Stock levels are still extremely high mainly due to stockpiling during last year with the risk of a negative impact on prices,'' Yousfi told Reuters. ''It is essential in this respect to maintain the reductions to the level agreed upon and for the period considered, that is until March 2000,'' he added. Some OPEC ministers have said recently that if prices rise too high then the agreement might have to be reviewed. But Yousfi said: ''We must remain prudent, vigilant and continue to respect scrupulously our agreement in order to avoid any new price deterioration.'' Iranian Oil Minister Bijan Zanganeh on Tuesday said he too thought it too early to discuss any review of OPEC's output limits. London's Centre for Global Energy Studies had on Monday said OPEC producers, credited in April with strict compliance with new supply limits, would have to maintain output discipline to erode petroleum stockpiles and lift prices again. ''There is a very real danger that compliance will slip in the months ahead,'' said the CGES. Oil dealers appeared confident that Iraq would agree to renew for a further six months the U.N. oil-for-food exchange which has seen Baghdad supply 2.1 million barrels a day in recent months. The fifth round of oil-for-food ends on May 24 and Iraq, which has called repeatedly for the complete lifting of sanctions, as on previous occasions has voiced its displeasure with the arrangement. ''The Iraq story will come into focus at the beginning of next week,'' said Barakat at Prudential Bache. United Nations Security Council diplomats meet on Friday to vote on continuing the programme. One European diplomat said on Monday that although Iraq was expected to continue oil sales there was ''an increasing level of doubt'' over its cooperation. Prices in dollars a barrel: May 18 May 17 (close) (close) IPE July Brent 15.13 15.81 NYMEX June light crude 17.11 17.94 --------------------------------------------------------------------------------