It is all OPECs fault (no it could not be Y2K!)

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

http://dailynews.yahoo.com/h/nm/20000121/bs/energy_usa_1.html

Friday January 21 12:37 PM ET OPEC-Inspired Panic Propels Oil Higher By Richard Mably

NEW YORK (Reuters) - U.S. oil prices spiraled higher again on Friday as buyers scrambled to take out insurance against the prospect of a deepening shortage of supply on the world petroleum market.

Oil buyers are taking no chances that the Organization of the Petroleum Exporting Countries might relent and ease the output limits which have forced oil prices to nine-year highs.

In near panic scenes on the New York Mercantile Exchange, reminiscent of the 1990-1991 Gulf crisis, crude jumped another 60 cents to $28.57 a barrel for March delivery. February crude had peaked at $29.95 before expiry on Thursday.

``We haven't seen trade and volatility on the oil market like this in non wartime conditions for 15 years,'' said Peter Gignoux of Salomon Smith Barney.

``OPEC seems to have adopted a very aggressive strategy and appears set to increase production only if there are no alternatives to preventing markets from overheating,'' said Washington's Petroleum Finance Corp. in a note to clients.

Many traders think that point already has been reached.

``The heating oil market now is most definitely overheated,'' said Nauman Barakat of ABN Amro in New York.

U.S. home heating oil rose most sharply on Friday, propelled by a lengthening cold snap in the U.S. Northeast, the world's largest single market for the petroleum product.

Weather forecasters expect the week-old cold spell in the Northeast to continue until the end of January, accelerating a drain on already lean heating oil stocks.

NYMEX February heating oil futures were up nearly 10 cents a gallon in late morning trade at 96.25 cents. Cash heating oil in New York Harbor cost a further 35 cents a gallon. Cash prices have more than doubled in nine days, futures are up 50 percent.

While some OPEC watchers still suspect that the cartel may pull a surprise and shortly ease its output restrictions, ministers show no public sign of changing their strategy.

A year-long agreement among OPEC and non-OPEC allies Mexico and Norway keeping nearly five million barrels daily from the 75 million bpd world market is due to expire at the end of March.

But oil ministers from three OPEC countries reiterated after a meeting on Friday that the cartel has no intention of letting its customers off the hook.

Libya's Oil Minister Abdullah al-Badri told Reuters from Tripoli that he and his counterparts from Iran and Algeria had agreed to propose to OPEC's March 27 conference that the export limits be kept in place until September.

Energy economists say that will drag inventories below commercial minimum operating levels.

The International Energy Agency in Paris on Thursday warned that commercial inventories of crude and petroleum products now at 10-year lows would suffer another 2.5 million barrel a day shortfall during the first quarter.

Oil's swift rise has raised concerns in the finance ministries of the world's industrialized powers that dormant inflationary pressures might be reignited.

European Central Bank Chief Economist Otmar Issing said he now fears that a temporary rise in inflation could become more permanent if it leads to higher wage settlements.

``We see developments in headline inflation heavily impacted by oil prices, which have tripled in 12 months,'' Issing said in London.

-- Its (all@conspriacy.com), January 21, 2000


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