The oil complex is rallying off the map. Do we have a embeded chip problem or is this due to the OPEC agreement. Please let us know. TIA

-- Jeff (, January 14, 2000


How about Artic Freeze and the sound of all those heating oil tanks being sucked dry!!

-- d........... (, January 14, 2000.

Y2K has hit, folks. Brace for impact!!

-- (, January 14, 2000.

Stock market bubble continues...Oil King roars. IMO, Fed. will use a heavy hand at the Feburary meeting.

-- Tommy Rogers (Been there@Just a, January 14, 2000.

Thanks for the post Jeff...... Do you have a link or location to share?

-- kevin (, January 14, 2000.

Hows come my Conoco stock is down 2.3% at 2:00 EST?

-- (alaskan@pipeline.guy), January 14, 2000.

Crude is at $28 /bbl.

-- Bill P (, January 14, 2000.

Fed is not going to anything but PRINT MORE MONEY!!!

Hyperinflation is at our doorstep.

-- Ishkabibble (, January 14, 2000.

Nope...not hyperinflation, cause then all the note holders (read "banks and mortgage companies") would get screwed.

No, when this thing finally implodes/explodes, it will be something new for the textbooks...

-- (@ .), January 14, 2000.

Crude oil futers Feb 00

-- Homer Beanfang (, January 14, 2000.

What's interesting about this oil move is that it is stictly NYMEX driven. Feb NYMEX crude just closed at $28.00, .80 over the March NYMEX and $2.50 over the Feb Brent. The Brent has been trading at rough parity or at discounts of less than $1 thru late '99.

If this group is to assume that a part of this is due to embeddeds and refinery disruptions, one would assume that there would be more problems overseas.

Hopefully we'll get some good posts here over the weekend and on Monday.

Ongoing Oil Forum

The NYMEX is closed Monday due to the ML King holiday but the IPE market in London should be open.

Interesting times in the oil sector!

-- Downstreamer (, January 14, 2000.

ok, i know you will think this is a stupid question. i may be brilliant :-) in other areas but i am totally DUH in the stock market.

last night i was watching the International Intelligence Briefing on TBN (normally i don't watch alot on that channel) and Cliff Ford showed a couple of slides on the stock market. He indicated that it is primarily technology stocks that are making the market look positive but that when you look at the stock market by market sector (e.g., healthcare--he showed six or seven but i can only remember one) almost all sectors have seen a decrease over the last year by single or double digits (as low as 17% i think for some).

What do you think about that statement?

-- tt (, January 14, 2000.

Wasn't Clifford a big, red dog?

-- Whew! (break@the.tension), January 14, 2000.

4% Oil Production Shortfall

Fair Use for Educational and Research Purposes:

Bloomberg Energy Fri, 14 Jan 2000, 3:35pm EST

1/14 14:49 New York Oil Prices Surge as Producing Nations Agree to Keep Output Quotas By Josh P. Hamilton Crude Oil Rises to 9-Year High OPEC May Keep Output Low

New York, Jan. 14 (Bloomberg) -- Crude oil rose 5 percent to the highest price since the Persian Gulf War in 1991, after an OPEC committee urged the group to keep production limits in place past their scheduled March expiration. ``We're nearing the point where oil prices will have an effect both on the long-term health of oil and on the economy,'' said Ken Haley, chief economist at San Francisco-based Chevron Corp., the No. 3 U.S. oil company. ``There is little doubt that if they keep production low, prices will go higher.''

The Organization of Petroleum Exporting Countries last March approved a yearlong program to cut production and eliminate a global surplus. Though prices doubled last year as inventories fell, OPEC said it still wants to see lower global stockpiles.

Crude oil for February delivery rose $1.33 to $28.02 a barrel on the New York Mercantile Exchange, the highest closing price since Jan. 16, 1991 and biggest one-day gain since March. Oil rose 16 percent this week. Trading ended early today and the exchange will be closed Monday for the Martin Luther King holiday. ``We're going to have a supply deficit over the first quarter, probably on the order of 3 million barrels a day worldwide, about 4 percent of demand,'' said Tim Evans, senior energy analyst at Pegasus Econometric Group in New York. Oil prices will reach ``at least $30 a barrel in early February.''

Production shortfalls will have to be made up by draining inventories further, and with U.S. crude oil and gasoline stockpiles close to their lowest levels since 1997, ``this is an urgent supply issue,'' Evans said.

Inflation-Adjusted Price

To be sure, oil prices still are comparatively modest by historical standards. Prices would have to more than double -- to $65 a barrel -- to equal an inflation-adjusted peak in 1981, according to a study by the U.S. Energy Department in November.

In London, Brent crude oil for February settlement rose 49 cents, or 2 percent, to $25.47 a barrel on the International Petroleum Exchange. The February contract expired today. The March contract gained 64 cents to $25.17 a barrel.

The production agreement last March, which included such non- OPEC countries as Mexico and Norway, aimed to cut daily world output by about 5 million barrels, or 7 percent, from February 1998 levels.

Today's recommendation came from OPEC's Ministerial Monitoring Committee, which reviews members' compliance with the promised output cuts. The committee said OPEC members made 80 percent of their pledged reductions last month.

Consumer Prices

Saudi Arabia, Venezuela and Kuwait expressed support in recent days for renewing the agreement, while Iran's oil minister today said production should stay at current levels until September.

Rising energy prices lifted the overall U.S. Consumer Price Index last year by 2.7 percent, higher than the 1.6 percent increase in 1998, the Labor Department said today.

Energy prices, which account for about a tenth of the price index, rose 1.4 percent in December after being unchanged in November. Gasoline costs increased 4.1 percent, the report said. Since December 1998, prices at the pump increased 30.1 percent, the biggest rise since a 36.8 percent surge in 1990 -- the year when the Persian Gulf crisis began.

Average U.S. retail gasoline prices rose to a 3 1/2-year high of $1.275 a gallon in the week ended Dec. 13, a government survey of 800 filing stations showed last month. The week's price was the highest since May 1996, according to the Department of Energy. Prices fell to $1.264 a gallon last week. ``The simple arithmetic is gasoline rises 2.5 cents a gallon per dollar rise in a barrel of oil,'' Chevron's Haley said, ``other things being equal.''

Heating oil for February delivery rose 4.53 cents, or 6.5 percent to $73.81 cents a gallon on the Nymex. It was the highest closing price since December 1996. Heating oil received a boost both from rising crude oil and a cold snap in the U.S. Northeast, the fuel's biggest market.

Heating demand will be 24 percent above normal in the Northeast over the next week, according to Weather Derivatives, a forecasting firm in Belton, Missouri. In New York, the biggest single market, demand will be up 26 percent.

Gasoline for February delivery rose 3.25 cents, or 4.6 percent, to 74.52 cents a gallon on the Nymex, the highest close since Nov. 29.

---------------------------------------------------------------------- ---------- ) Copyright 2000, Bloomberg L.P. All Rights Reserved.

-- Bill P (, January 14, 2000.

last night i was watching the International Intelligence Briefing on TBN (normally i don't watch alot on that channel) and Cliff Ford showed a couple of slides on the stock market. He indicated that it is primarily technology stocks that are making the market look positive but that when you look at the stock market by market sector (e.g., healthcare--he showed six or seven but i can only remember one) almost all sectors have seen a decrease over the last year by single or double digits (as low as 17% i think for some).

What do you think about that statement?

I think that statement is uninformed. Here is a link to the Vanguard Wellington Fund. This fund invests in oil, autos, and utilities, none of that stuff. As you can see, it has been making steady gains for years.

-- Amy Leone (, January 14, 2000.

tt, I heard the same thing on tv about a month ago. go figure.

-- Hokie (, January 14, 2000.

A heavy hand would be a 1/2 percent or higher rate change before the February meeting. Expectation sounds like 1/4 - 1/2 in Feb which is anything but heavy. Still looking at the margin requirement. Greenspan is well known for gradualism unless there is a big jump in the market rate for treasuries that would lead the fed expect a succession of hikes until the data or market damps down.

-- Squid (, January 14, 2000.

Hi tt. Actually Amy, the link you provided indicates that the Wellington fund is invested about 6% in

Yes, they have achieved okay returns the last few years, but way below even the blue chip market indices which now include some stocks which one could argue have been affected by

My guess is that they are only doing as well as they have because that 6% has been working awfully hard increasing at 400-500% while the rest have been lagging or declining.

I'm not saying that is a good thing. Quite the contrary, I think Wellington is a good conservative place to be. This does not negate the fact that we now have a two-tiered stock market whose first tier has continued to shrink since April of 1998.

It's fun to look at the numbers, but they won't last through the end of the year.

-- nothere nothere (, January 14, 2000.

Ed and others... The funds have been getting long all week and today, they blew the doors off it. As I've said before, when these guys wanna buy something, they buy it. You should all think real hard about whether you buy the "new saw" that CPI is really meaningless unless you separate it and "get to the core inflation". Ask yourself how many things you use that don't involve oil? Really think it through and then ask yourself if you think rising crude prices are inflationary, deflationary or meaningless? You're kidding yourself if you answered anything but inflationary. Why do you think we're sending the Michelin Man (Richardsonian) over to make an ass of himself with the Saudis et al?

Also, I can tell you for a fact that the "funds" don't get long crude to make a quarter. These boys are looking for a real move. That would mean 29-30 dollar WTI for us. The reason for thier bullishness comes from some amazing new found Arab solidarity over there.

These guys (OPEC) are getting some serious payback for last year and then some. Me thinks the "new economy" is going to have to reconcile itself to the "new OPEC" before we start chalking up any more 100 point days on the Daq. Opec is dead serious about not cheating with this thing and keeping solidarity. We blew our foreign policy bigtime. These guys even managed to keep the Vens in the game despite some VERY serious shit down in Venland. This is a wake up call people. We hit nine year highs on the crude today. Not seen since the freaking gulf war. And no, I don't think this is wholly due to Y2K, but I wouldn't go so far as to rule out production problems as a contributing factor either. I know (f*ck you pollies) of actual Y2K problems that HAVE caused problems at refineries post rollover. And, there are refineries that are having problems getting back on their feet after little "un-named" snafus. I don't buy the story that all is well.

Regardless, inflation is here now and is here to stay for a while.

-- Gordon (, January 14, 2000.

I think that the Y2k problems are just getting started.

-- Earl (, January 14, 2000.

Author Comment Downstreamer Administrator (1/14/00 1:25:45 pm) Reply Soliciting reasons for todays $1.30 rally on NYMEX crude. ---------------------------------------------------------------------- -------- --

This current cold weather snap in the Northeast is NOT a sustainable pattern. I'll post the National Weather Service 6 to 10 day outlook when it comes out at 2 CST, but this month is on track to be one of the warmest Jans on record.

Its also interesting that this is strictly a NYMEX move. The Brent is now trading at a $2.50 discount to WTI after being at less than $1 / barrel discount most of late '99. Notice the IPE Feb/Mar Brent spread is at 30 cents while our NYMEX Feb/Mar spread is 90 cents.

What's the deal?

Downstreamer Administrator (1/14/00 1:28:51 pm) Reply Re: Here's the OPIS explanation ---------------------------------------------------------------------- -------- --

This was published well before the strong close.

2000-01-14 11:05:27 EST


Cold temperatures, continued refinery problems, and a clear OPEC consensus on production are all combining this morning to send futures prices and cash values appreciably higher. NYMEX WTI futures hit $27.30 bbl in the first half hour of trading, easily surpassing the post Gulf War high. At presstime, they stood at $27.28 bbl, up 59cts bbl, and threaten to close above $27 bbl for the first time since the Persian Gulf conflict. A strong close could signal another leg in this long bull market, but skeptics note that crude has traded above $27 bbl about eighteen times on an intraday basis, but has yet to settle above that number.

Gulf Coast gasoline is moving up with the NYMEX, but also because of very strong buying from at least two refineries. Those companies have chased prompt unleaded gasoline to where it is only discounted by 2.25cts gal off the NYMEX. With NYMEX unleaded up 1.68cts gal to 72.95cts gal at midmorning, the cash price was at 70.75cts gal. The Gulf Coast gains aren't necessarily being matched in other areas. Group 3 gasoline has advanced with the NYMEX, but sellers are sticking with a 2.25cts gal discount for a net price of about 70.75cts gal. Chicago sellers have actually dropped the premium they are looking for versus the NYMEX, and are now looking for 1.85cts gal over the screen, versus 2.25cts gal last night. That still puts Chicago gasoline at about 74.75cts gal, a recent high. New York gasoline has rallied with sellers narrowing their discount to 1.8cts gal to the Merc, putting the absolute value at just over 71cts gal. Distillates are very active in New York with refiners buying heating oil in N.Y. Harbor. They've paid 2cts gal over the Merc, or 73.4cts gal. February NYMEX futures were up 2.12cts gal at midmorning to 71.4cts gal. But diesel in New York isn't matching the NYMEX gains with the premium to the Merc dropping to 2.85cts gal over the screen or about 74.75cts gal. Diesel at the Gulf Coast isn't particularly active with spot prices at a 0.9cts gal discount to the Merc, putting the value at 70.5cts gal. Midwestern diesel is pegged at 1.25cts gal under February futures in the Group (about 71.75cts gal) with Chicago volumes at 2.6cts gal off the screen, or about 70.35cts gal. Markets are very active for a Friday. Refiners that were supposed to be back up and running appear to be having some problems. There are also reports of a problem with BP Amoco's Yorktown refinery. - Tom Kloza, Mark Mahoney

-- Andy (, January 14, 2000.

Gekko you doomer, the only place oil has had embedded chip problems is in those greasy heads of yours and RCs, ROFLMAO!

Advice for those wanting facts about the oil industry ....don't look here, check the news in the REAL world.


-- FactFinder (, January 15, 2000.

FactFinder--real world news? Is there any? Get a grip. It's lies, lies, and damn lies.

-- Mara (, January 15, 2000.

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