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  • oilgas66 oilgas66 May 20, 1998 9:17 AM Flag

    API - News Release

    Oil Prices for June Fall Near 10-Year Low

    Knight-Ridder/Tribune Business NewsWednesday, May 20, 1998
    May 20 (Houston Chronicle/KRTBN) via NewsEdge
    Corporation - Oil prices plunged to their lowest levels in
    almost 10 years Tuesday, pushed down as traders were
    forced to sell oil rather than store it because oil
    storage tanks in the Midwest are full.

    sweet crude for delivery in June closed on the New York
    Mercantile Exchange Tuesday at $12.96 per barrel, down $1.11
    per barrel. It was the lowest the near-month contract
    has closed since Oct. 7, 1988, when the contract
    closed at $12.94. During the trading day, the June
    contract traded as low as $12.50 per barrel.

    Tuesday was the last day of trading for the June
    contract. Trading often is volatile on such days, when
    market fundamentals give way to hectic activity over
    such transactions as short sales, in which traders
    agree to sell oil at a certain price on a specific
    date. If the price of oil falls in the interim, they
    make a profit.

    Storage tanks in Cushing, Okla.
    -- the site where oil futures contracts are settled
    and the oil is delivered -- were reported at capacity
    Tuesday. Some of the 125 tanks at Cushing can hold as much
    as 500,000 barrels of oil.

    "Crude stocks in
    the Midwest are extremely high," said John Saucer,
    oil analyst with Salomon Smith Barney in Houston.
    "People just don't have room for these barrels, so that
    puts sellers in a very difficult situation."

    The July benchmark crude oil contract was off only 10
    cents per barrel Tuesday, closing at $15.01, something
    analysts and industry observers took to indicate that the
    price collapse will be short-lived and was more than
    likely a symptom of the near-month contract expiration.

    "It is a Nymex (New York Mercantile Exchange) roll
    cycle. We had the same thing happen at the end of last
    month when we got down to about $13," said Ken Miller,
    senior principal at the Houston office of Purvin &
    Gertz, an international oil consulting firm.

    expects the near-month contract to rebound in the next
    few days to levels closer to $15, where the contracts
    for the so-called "outer months" were trading
    Tuesday. For example, the benchmark crude oil contract for
    delivery in September closed Tuesday at $16.06.

    Petroleum products also fell on the Merc Tuesday, although
    only modestly. June heating oil fell 0.04 cent to
    40.95 cents a gallon; June unleaded gasoline fell 0.02
    cent to 50.03 cents a gallon.

    Natural gas for
    delivery at the Henry Hub in June was flat, rising only
    1.5 cents to close at $2.149 per thousand cubic feet
    on the Merc. That contract expires May 27.

    Oil prices could take another dip today as traders
    react to high inventory figures nationwide that were
    released Tuesday.

    U.S. crude oil inventories last
    week increased to 353.1 million barrels, up 8.788
    million barrels compared to the week ended May 8,
    according to the American Petroleum Institute's weekly
    survey of crude oil and refined products stockpiles.

    Crude oil inventories are running 38.41 million barrels
    ahead of where they were at this time last year.

    Also on Tuesday, it was announced that Russia will be
    participating in the June 24 OPEC meeting as an observer to the
    negotiations, similar to the role Mexico played in the March
    meeting in Vienna, Austria.

    The Organization of
    Petroleum Exporting Countries struck an unprecedented
    production cutback agreement that included cutbacks from
    Mexico and Norway. The cartel is expected to again
    strive to roll back production in June because the March
    cuts are not perceived as having been sufficient to
    shore up prices.

    Russia, one of the world's top
    five oil exporters, has already agreed to reduce oil
    exports by 61,000 barrels per day as its contribution to
    market stability.

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    • It looks the down turn in asia may last two /three years If it is prolonged how much effect will it have on P

      • 1 Reply to lionel_52
      • Good question, but I'm not sure. Phillips has
        limited exposure in Asia via chemicals which will slow a
        little; however, oil & gas may pick up. I copied this
        news release down this

        Thursday June 4, 6:48 am Eastern Time

        Asia markets
        mixed after U.S. dip, oil prices surg

        (Adds oil
        price surge)

        By Stuart Grudgings

        SINGAPORE, June 4 (Reuters) - A hefty fall in U.S. stocks
        overnight forced some key Asian markets into early retreat
        on Thursday, but the overall picture was mixed as
        investors drew breath after recent heavy

        Shares in Hong Kong and Taiwan fared worst in the wake
        of Wall Street's one percent slide, each falling by
        more than two percent in early trade.

        markets continued to take comfort from the yen's grip
        above 139 to the dollar, however, and crude oil prices
        roared higher on prospects that the oil ministers of key
        producing countries would meet to discuss a possible cut in
        global output.

        New York Mercantile Exchange
        (NYMEX) July crude futures were trading at $15.41 per
        barrel, up 60 cents from the New York close

        The surge came after reports that the oil ministers
        from Saudi Arabia, Mexico and Venezuela would meet
        later on Thursday, probably in Amsterdam, to discuss
        the possibility of cutting output by at least 500,000

        GO! Phillips!

    • As I read your post I think I saw good news between the lines. Why didn't Phillips drop with this release?


      • 1 Reply to wildcatwell
      • Although Phillips core business is oil & gas,
        Phillips is diversified with other business interest that
        will buffer this anticipated issue. This is typical
        trading for month ending contracts. Gas brokers
        manipulate oil prices, just like money makers shorting
        stocks. Don't over react to this. It will be short lived.
        Summer gas usage is expected to be at an all time high.
        Global oil producer are going to agree on production
        rates to maintain profitability.


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