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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (15756)	6/3/1999 1:41:00 PM
From: American Spirit	Read Replies (1) \| Respond to of 99985

* OIL PRICES have been dropping sharply. So what inflation? Oil slips as U.S. gasoline signals disappoint LONDON, June 3 (Reuters) - Oil prices headed lower on Thursday as new figures showed that U.S. summer driving demand was falling below expectations. International benchmark Brent was 10 cents lower at $14.78 a barrel by 1605 GMT, more than two dollars down from early May 16-month highs. The latest move down came after the American Petroleum Institute (API) data showed a surprise build in gasoline stocks, which usually fall at this time of year as U.S. drivers take to the roads in force. The stock build was paricularly bearish as refineries across the U.S. have been cutting back gasoline output recently because refining returns are so poor. The inventory increase dampens producer hopes of a swift resumption to the rally which hauled prices up beyond $17 in early May from sub-$10 mid-February lows. Traders are now on the lookout for new indications on whether producers are keeping up good early compliance with their 2.1 million bpd output cut deal in March which fired the rally. Supply figures for April showed a compliance rate of around 80 percent with the new measures, which see OPEC producers join forces with big non-OPEC exporters Mexico and Norway. May output data is due in coming days. World oil prices had fallen sharply on Tuesday after Iraq said it would be able to raise crude exports under a new phase of the United Nations oil-for-food exchange. Brent is averaging just $13.17 a barrel so far this year, still below last year's $13.34 mean, the lowest level since 1976. But the second quarter is traditionally a weak period for oil demand, as northern hemisphere winter demand tails off, and senior OPEC figures have been quick to say that the renewed falls are no cause for panic. ''The decline in the oil price is due to speculation. The fundamentals are still sound,'' a Gulf source familiar with Saudi thinking said on Wednesday. ''Saudi Arabia and other producers are determined to do whatever is possible to improve prices,'' he added. Iran's OPEC governor, Hossein Kazempour Ardebili, expressed confidence that high compliance with the supply restraint pact would boost prices. He said it was too early to review the output curbs. Saudi Oil Minister Ali al-Naimi is meeting in Riyadh later this week with his counterpart from Mexico, Luis Tellez, to compare notes on the market. 12:16 06-03-99 Jun 3 Jun 2 (1605 GMT) (close) IPE July Brent 14.78 14.88 NYMEX July light crude 16.51 16.65