http://cbs.marketwatch.com/archive/20000822/news/current/crude.htx?source=htx/http2_mw

API posts big drop in crude stocks

By Myra P. Saefong, CBS.MarketWatch.com

Last Update: 6:06 PM ET Aug 22, 2000

NEW YORK (CBS.MW) -- October crude futures rallied to more than $32 a barrel in overnight Tuesday trading after a key report said crude inventories as of the week ended Aug. 18 plunged 7.8 million barrels -- a dramatic turnabout from the forecast rise of at least 300,000 barrels.

"Forget everything else -- we're back to record-low stocks again," Phil Flynn, a senior energy analyst at Chicago brokerage house Alaron.com, exclaimed just after the data was released. He also said the latest data was a "shocker" and will have "explosive" effects.

In after-hours Access trading, October crude oil added 84 cents, or 2.7 percent, to $32.06 a barrel.

After the markets closed, the American Petroleum Institute said crude stocks, as of the week ended Aug. 18, dropped a whopping 7.8 million barrels to total 279.7 million barrels.

Miscalculated

The data defied market expectations for a 300,000-barrel to 700,000-barrel rise, according to a Bridge New survey.

Gasoline inventories fell 1.14 million barrels, the API said, on the high end of expectations for a drop of 800,000 barrels to 1.2 million barrels.

API's measure of distillate supplies, which include heating oil and diesel fuel, unexpectedly declined by 2.9 million barrels, despite expectations for a rise of 2.5 million to 2.9 million barrels.

Meanwhile, refinery production rose to 96.9 percent of capacity from the prior week's revised 95.7 percent, the API reported.

Ahead of the news on the New York Mercantile Exchange Tuesday, September crude fell $1.25 to close at $31.22 a barrel. October crude, which is now the front-month contract, fell 76 cents to $31.22.

September heating oil declined 1.97 cents to 90.35 cents per gallon, and September unleaded gasoline slipped 2.60 cents to 93.33 cents per gallon. September natural gas fell 22.7 cents to $4.52 per million British thermal units.

Contract expiration, waning hurricane fears pressure oil

Oil shares closed almost flat while prices fell Tuesday, pressured by the expiration of the September contract and waning concerns that a hurricane will affect production in the Virgin Islands or the Gulf of Mexico.

"Forecast models differ on whether the storm (Hurricane Debby) will track into the Gulf of Mexico or will turn north toward the Bahamas," according to a report from New York-based IFR Pegasus.

The market will continue to keep a close watch on the storm's direction. Its effect on production at Hovensa's St. Croix refinery in the Virgin Islands is minimal, according to Bridge News, and it doesn't appear to be headed for the Gulf of Mexico, a major oil- and natural gas-producing region.

However, no one is really sure where Debby will end up, Flynn said. The storm season, coupled with the latest crude supply data, should provide good support for the market on Wednesday, he said.

In the equities market, the Philadelphia Oil Service Index ($OSX: news, msgs) closed unchanged. Shares of Transocean Sedco Forex (RIG: news, msgs) added 2 3/8 to 55 7/8. See related story.

The CBOE Oil Index ($OIX: news, msgs) fell 0.2 percent as shares of Texaco (TX: news, msgs) fell 1 1/8 to 52 3/16 and Kerr-McGee shares (KMG: news, msgs) gained 13/16 to 61 1/4.

-- (in@the.news), August 23, 2000

Answers

Hang on tight CEEP.

-- Carlos (riffraff@cybertime.net), August 23, 2000.

http://www.bloomberg.com/bbn/topfin_2.html?s=AOaNMfhQoQ3J1ZGUg

LINK

Wed, 23 Aug 2000, 1:47am EDT

Crude Oil Jumps as U.S. Inventories Drop to Near 24-Year Low

By Taizo Hirose

Tokyo, Aug. 23 (Bloomberg) -- Crude oil rose as much as 3 percent as U.S. inventories unexpectedly fell 2.7 percent last week to close to a 24-year low, raising concern about winter heating oil supplies.

The 7.77 million-barrel decline to 279.71 million barrels left crude inventories close to the low of 279.0 million two weeks ago. Heating oil supplies, meantime, are 39 percent lower than a year ago, signaling supplies could be short for winter.

The report was ``a shocker,'' given how far inventories had already fallen, said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons Inc. in St. Louis.

Crude oil for October delivery rose as much as 92 cents, or 3 percent, to $32.14 a barrel in electronic trading in Asia on the New York Mercantile Exchange. Oil prices rose for a fifth day in six, bringing gains for this month to 18 percent.

Inventories of distillate fuels, such as heating oil and diesel, fell 2.89 million barrels to 111.18 million. Analysts surveyed by Bloomberg expected a gain of 1.3 million to 2 million barrels.

Heating oil ``stocks were virtually unchanged,'' said O'Grady. ``At this time of year they should be rising, and pretty significantly.''

Heating oil for September delivery rose as much as 2.65 cents, or 2.9 percent, to 93.00 cents a gallon in electronic trading on the Nymex. Prices are up 23 percent this month.

``It's scary to think what's going to happen if a cold snap hits the U.S. this winter,'' said Tsutomu Toichi, director at the Institute of Energy Economics, Japan.

Japan Short

Analysts said Japan also faces a heating fuel shortage as refiners were expecting oil prices to fall, which discouraged suppliers from building kerosene inventories for winter.

``Kerosene supplies are certain to become tight this winter, driving domestic prices higher,'' said Naohiro Jokei, manager of the petroleum products section at Itochu Corp., Japan's second- largest trading company. Japan is the second-biggest consumer of oil after the U.S.

Oil inventories have declined even after the Organization of Petroleum Exporting Countries boosted output twice this year. OPEC, which pumps about 40 percent of the world's crude, has increased daily production this year by around 2 million barrels, or 2.7 percent of world daily output.

OPEC is considering whether to boost production in September to cool prices near nine-year highs.

``Unless OPEC gives a very clear signal before their September 10 meeting that they plan to increase oil output, (WTI) will stay between $32 and $34,'' said Byung Jae Lee, a crude oil trader at Hyundai Oil Refining (Singapore) Pte.

OPEC said it would increase oil output 500,000 barrels a day only if the so-called OPEC basket price -- the average price of six crude grades produced by OPEC members and one crude pumped by Mexico -- breaches $28 a barrel for 20 consecutive days. Prices exceeded $28 a barrel on six consecutive days through Monday, Aug. 21, the last time OPEC updated its basket price.

``Adding 500,000 barrels a day is not enough, OPEC has to increase output by at least another 1 million barrels a day'' to meet current demand, said Lee at Hyundai Oil.

-- (W@tching.closely), August 23, 2000.

Another view:

``At some point in time, the Saudi spare capacity is going to hit the market,'' one Hong Kong-based oil analyst said.

``The market is near the top of the cycle, and capital budgets (on exploration) are shooting up.''

Wednesday August 23 2:57 AM ET Crude Oil Prices Surge in Asia

By Lawrence Yong

SINGAPORE (Reuters) - Crude prices surged in Asia on Wednesday as inventories in the world's largest energy market, the United States, plummeted to a 24-year low.

The American Petroleum Institute (API) said late on Tuesday that U.S. crude oil stocks fell by a hefty 7.8 million barrels to 279.7 million for the week to August 18, hitting a second 24-year low mark in just one month.

Last week, the API said stocks rose modestly, after also tumbling in early August to lows not seen since March 1976.

The benchmark October New York Mercantile Exchange (NYMEX) contract soared 76 cents, or 2.4 percent, to $31.98 a barrel by 2:12 a.m. EDT.

The rally reversed a 76-cent decline in New York prices on Tuesday, as the low crude stocks sparked fears of shortfalls in U.S. heating oil supplies this winter.

Recent sky-high prices have discouraged refiners from building inventories, so the rally on Wednesday following the stocks data was no surprise, analysts said.

``It's a vicious cycle at the moment in terms of low stocks and high prices, which is self-feeding,'' said John Russel, managing director of Bangkok-based Petroleum Economics Limited (PEL) Pacific.

He said crude producers need to increase output and market the crude aggressively to raise the market's perception of more oil being available.

``Otherwise stocks will not be built, and there will not be the inventory data on which to trade the price down,'' he said.

Spotlight On Opec

The low stocks throws the spotlight on the Organization of Petroleum Exporting Countries (OPEC), which controls most internationally traded oil.

OPEC does not plan to act on prices until its next ministerial meeting on Sept. 10.

OPEC president Ali Rodriguez last week reaffirmed the cartel would use its price mechanism to determine extra supplies. The mechanism stipulates the release of 500,000 barrels-per-day (bpd) if its crude basket stays above $28 for 20 consecutive working days.

This could dovetail with the OPEC meeting as the basket has remained above $28 for six-straight days up to Monday.

Analysts said OPEC kingpin member Saudi Arabia was the only one wielding significant spare capacity, and they were watching the kingdom's reaction to the current high prices.

``At some point in time, the Saudi spare capacity is going to hit the market,'' one Hong Kong-based oil analyst said.

``The market is near the top of the cycle, and capital budgets (on exploration) are shooting up.''

OPEC has collectively raised oil output twice so far this year by around 2.4 million bpd, but both times failed to tame high-flying prices.

Saudi Arabia helped press prices down temporarily last month when it pledged to hike its output by 500,000 bpd.

But the kingdom was seen hesitating on the full release of promised volumes and this pushed prices back up.

Saudi Arabia's move was unpopular among OPEC price hawks, such as Venezuela and Iran, the former rallying support for September's first OPEC summit of heads of state in 25 years as a show of group unity.

Consumers Voice Concern

Major oil importers were growing impatient with OPEC's management of the world oil markets.

Adding to United States lobbying, the European union said on Tuesday it had contacted OPEC to voice concern over high fuel import costs.

Asian economies, which rely mainly on imported oil to power growth, were also hurting, analysts said.

``Some studies showing that oil demand is not slowing are not correct,'' Russel said.

Russel said countries that pass through oil costs to consumers such as the Philippines and Thailand have seen oil prices ignite fiery protests.

-- cpr (buytexas@swbell.net), August 23, 2000.

Awwww, man...just my luck. Been away for awhile, come back and a lot of cool people aren't here anymore. But, cpr is still here? Awww, man.

-- (Dood@funky.stuff), August 23, 2000.

Analysts said OPEC kingpin member Saudi Arabia was the only one wielding significant spare capacity, and they were watching the kingdom's reaction to the current high prices.

``At some point in time, the Saudi spare capacity is going to hit the market,'' one Hong Kong-based oil analyst said.

If that Saudi spare capacity doesn't hit the market soon, it may be a recession that brings down prices by reducing demand for oil.

High oil prices were a contributing factor in the 1973-75, 1981-82 and 1990-91 recessions.

-- (Saudi@spare.capacity), August 23, 2000.

Note paragraph three.

08/23 10:31 Crude Oil Rises as U.S. Inventories Plummet Unexpectedly

By Mark Shenk

New York, Aug. 23 (Bloomberg) -- Crude oil rose more than 4 percent as an unexpected drop in U.S. inventories last week close to a 24-year low rekindled concern about tight supplies.

The 7.77 million-barrel decline came as the Organization of Petroleum Exporting Countries resisted calls from consuming nations for more oil. While Saudi Arabia said last month that an additional 500,000 barrels was needed daily, other OPEC members said no decision will be made before the group meets Sept. 10.

``Obviously no additional barrels are coming in from Saudi Arabia or anywhere else for that matter,'' said Michael Fitzpatrick, a trader at Fimat USA Inc. in New York. ``I don't see any relief'' from high prices until the inventories rise, he said.

Crude oil for October delivery rose as much as $1.33, or 4.3 percent, to $32.55 a barrel on the New York Mercantile Exchange, the biggest one-day rise since Aug. 4. Oil is up 49 percent from a year ago.

Heating oil supplies were little changed at a time when refiners usually build up stockpiles for the winter heating season. Inventories rose 16,000 barrels to 42.21 million barrels, the American Petroleum Institute said in a weekly report late yesterday, widening a year-on-year deficit to 39 percent from 38 percent a week earlier. Supplies rose 2.1 million barrels the same week last year.

``It's scary to think what's going to happen if a cold snap hits the U.S. this winter,'' said Tsutomu Toichi, director at the Institute of Energy Economics in Japan.

Heating oil for September delivery rose as much as 4.65 cents, or 5.2 percent, to 95 cents a gallon on the Nymex. Prices are up 21 percent this month.

[ snip ]

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Bloomberg%20Ener gy&touch=1&T=energy_news_front.ht&s=AOaPgQBRJQ3J1ZGU g

-- Cash (cash@andcarry.com), August 23, 2000.

Looks like even Clinton is beginning to understand. Note paragraph three (again).

Light crude jumps more than $1 a barrel; Clinton says he'll lobby OPEC

August 23, 2000: 12:29 p.m. ET

NEW YORK (CNNfn) - Crude oil prices jumped in New York Wednesday morning after a report showed that U.S. oil stocks continued to dry up amid high demand and few signs that OPEC countries will boost oil production enough to reverse pricing any time soon.

The runup in prices prompted President Clinton to say he would talk to Nigerian President Olusegun Obasanjo about OPEC production levels during his visit to the African nation this weekend. But he admitted it may be difficult to find the additional supply needed to reduce prices.

"We have to look where there is excess capacity ... part of this is a question of whether the OPEC nations can increase their production," Clinton said.

Clinton told reporters in the White House rose garden that crude prices needed to drop to a price range in the low-to-mid-$20 a barrel to sustain economic growth. But prices continued to move in the other direction Wednesday.

Light crude oil for October delivery jumped $1.33 to $32.55 a barrel on the New York Mercantile Exchange in midday trading. Prices hit as high as $32.80 a barrel earlier in the day.

-- Cash (cash@andcarry.com), August 23, 2000.

looks like the #hit will hit the fan when the new prez steps in uh huh, yeah it does.

can anyone say .... No cash, no gas = ?

-- nocash (nocash@-$$.broke), August 23, 2000.

THINK==SOLAR-ENERGY!!!!

-- al-d. (dogs@zianet.com), August 23, 2000.

We all knew this would happen. The oil companies beefed up their inventories in advance of Y2K because they knew they had massive problems with embeddeds. Now they are running out, and they still haven't repaired enough to get back to normal production. Doesn't matter to them, they just raise the price. The real damage from Y2K is just starting to show up.

-- (economic@meltdown.soon), August 23, 2000.