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

To: Aggie who wrote (131)	5/21/1999 9:09:00 AM
From: diana g	Read Replies (3) \| Respond to of 350

Hi Aggie, I was asking a while back if anyone in the oil business remembered the 'false oil glut' of '93 described by Matt Simmons. In considering how much weight to give Matt Simmons' ideas, it would be valuable to compare his description of this with the memories of other knowledgeable oil biz folks. Here's Matt Simmons' description from issue 39b of 'Offshore Drill Bits' atoffshore.com ------------------------------------------------------- >>>>>> The MG (Metallgesellschaft) Debacle <<<<<< In mid-1993, as oil prices were bouncing between $18 and $20 a barrel, suddenly prices started to fall. As the fall accelerated, the industry "experts" all started talking about the "oil glut", and the world awash with oil. As prices finally broke through $15, briefly touching around $13.50, one noted analyst was quoted as saying the "fear premium" had finally disappeared and we would have oil prices in this range for many years to come. This 1993 oil price fall turned out to be the first of two "paper barrel" collapses. All that was happening was the MG (Metallgesellschaft) trading firm got really long on oil, ran out of funds and found themselves in a savage short squeeze. As contracts were liquidated, prices fell even faster. Once their positions got totally unwound, by an expert who had conducted the same exercise for silver back when the Hunts tried to corner silver, crude oil quietly began its rise back to $18 to $20 level. As far as we know, our firm was first in the world to figure out that "MG was the culprit." By late fall of 1994, it was widely acknowledged that MG caused the "phony collapse." Now, we have gone through the second "phony collapse" of paper barrels, but this time, the culprit was bad data (IEA) and hedge funds who bet accordingly. Not a pretty picture for the astuteness of our energy analysts or the industry executives. ----------------------------------------- Aggie, et al, Is Matt Simmons' description of this '93 event accurate? Is he distorting the story to use it to support his ideas about the present situation, or is he telling it straight? regards, diana

To: Aggie who wrote (131)	5/21/1999 2:42:00 PM
From: diana g	Respond to of 350

Domestic Rig Count Up by 11 <<<"Are things picking up in West Texas yet, in response to the oil price?">>>> dailynews.yahoo.com Friday May 21 2:11 PM ET HOUSTON (AP) - The number of rigs actively exploring for oil and natural gas in the United States has risen by 11 to 518, the third straight increase after months of declines and record lows. Of the rigs running nationwide this week, 138 were exploring for oil and 380 for gas, Houston-based Baker Hughes Inc. (NYSE:BHI - news) reported Friday. During the same week last year, 855 rigs were operating in the United States. Baker Hughes has kept track of the count since 1944. The tally peaked at 4,530 on Dec. 28, 1981, during the height of the oil boom, but has set record lows in nine of the last 18 weeks. The latest was 498 on April 9. Of the major oil- and gas-producing states, Oklahoma gained six rigs, New Mexico gained three and Wyoming gained one. Texas lost five rigs and California's total fell by two. The numbers in Alaska and Louisiana remained unchanged.