Oil Consuming Nation News

World oil markets dove on Thursday, apparently fueled by speculators' sell-off. Benchmark Brent blend futures dropped $0.61 cents to $20.02 a barrel in late trading after overnight U.S. data indicated slower than expected demand growth for gasoline in the world's biggest oil consuming nation. Weekly government data showed U.S. gasoline inventories rose in the week to August 20 when dealers were expecting a large decline.

Euphoria surrounding the soaring price per barrel of oil soured a bit last week, as world oil markets took a nosedive as speculators apparently decided the rally which doubled prices since March had gone far enough. London benchmark Brent blend futures dipped $0.61 cents to $20.02 a barrel in late trading after overnight U.S. data indicated slower than expected demand growth for gasoline in the world's biggest oil consuming nation. Weekly government data showed U.S. gasoline inventories rose in the week to August 20 when dealers were expecting a large decline. "Gasoline supplies appear plentiful," said Prudential Bache broker Nauman Barakat. Traders said the investment hedge funds which have led this year's price rise, in the wake of OPEC supply cuts, sold heavily on Thursday.

A recent report from Lehman Brothers found that global offshore drilling budgets are set to grow more than 10 percent in the coming year. The survey, which utilized the opinion of 320 oil companies, indicated that primary drivers for growth will be the North American offshore drilling market, with the U.S. and Canada expected to spend 15.7% and 28% more respectively. Spending outside of North America is not expected to expand so rapidly. The findings have sparked a mini rally among the offshore oilfield services stocks, a volatile group which has enjoyed a healthy 1999 nonetheless. Crude oil, gasoline and heating oil all posted big gains on the New York Mercantile Exchange on Wednesday after industry data showed a huge decline in oil and refined products stored in the U.

Offshore oilfield service stocks, to put it mildly, have endured a wild ride for much of 1999. The once high-flying sector actually hit the skids in concert with the late 1997 Asian financial crisis, and resultant plummet in oil prices. Despite a raging rally in oil pricing for much of the year, investors have cautiously approached the stocks. One reason for the caution is purely psychological, as too many investors have been burned too many times on the cyclical stocks. Another is political, as OPEC’s current production restraints are eyed warily. Nevertheless, last Wednesday proved a boon to these companies collectively, as a bullish market for crude oil and refined oil products fueled strong gains for U.S. oilfield service and drilling stocks.

Offshore oilfield service stocks, to put it mildly, have endured a wild ride for much of 1999. The once high-flying sector actually hit the skids in concert with the late 1997 Asian financial crisis, and resultant plummet in oil prices. Despite a raging rally in oil pricing for much of the year, investors have cautiously approached the stocks. One reason for the caution is purely psychological, as too many investors have been burned too many times on the cyclical stocks. Another is political, as OPEC's current production restraints are eyed warily. Nevertheless, last Wednesday proved a boon to these companies collectively, as a bullish market for crude oil and refined oil products fueled strong gains for U.S. oilfield service and drilling stocks.