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FOCUS-Oil tumbles as wholesalers destock after Y2K

By Richard Mably

LONDON, Jan 4 (Reuters) - Oil prices took a dive on Tuesday, hit by the smooth transition through the millennium computer date change and abnormally mild weather in the United States.

Benchmark Brent crude in the first trading day of the New Year opened a $1.18 down before recovering to stand at $24.39 a barrel, a 69 cent loss from last Thursday's close.

Dealers attributed the decline in part to Tuesday's temperatures of an extraordinary 20-25 degrees fahrenheit over the seasonal norm in the Northeast United States, the world's single largest heating oil market.

``The driving force behind the rout are forecasts of mild weather on the U.S. East Coast. The overall pattern of mild temperatures means that winter demand has been poor,'' said Lawrence Eagles of brokers GNI in a daily report.

Boston-based Weather Services Corp in a 6-10 day forecast said U.S. Northeast temperatures were expected to moderate but stay above normal. Mild winter weather also was forecast for other leading heating oil consuming regions Europe, South Korea and Japan.

Traders said the lack of any significant supply disruption from the millennium computer bug also was having a negative impact on the oil market.

Potential troublespots like Russia and key OPEC powers in the Gulf, Africa and Latin America all said energy flows pumped through the date change to 2000 without incident.

Iraq too said exports continued after the clock on its export pipeline through Turkey was turned back by four years but shippers said exports from Ceyhan were scheduled for a week-long gap. That could cut average Iraqi supplies for January by 500,000 bpd to about 1.45 million.

Wholesalers and retailers that built up stocks in the West for fear of supply shortages now are expected to run down inventories.

Some 17 million barrels of crude, distillate fuel and gasoline that were stockpiled by distributors at the end of 1999 for Y2K reasons were likely to be returned to the U.S. market this month, the U.S. Energy Information Administration said on Monday.

Nevertheless, analysts believe OPEC output curbs still will keep world supplies in deficit versus demand during the first quarter, keeping downward pressure on refinery inventories.

OPEC is not expected to make a final decision on whether to ease the output cuts until a March 27 meeting now scheduled for Vienna after Venezuela called for the postponement of a summit of OPEC leaders in Caracas.

Leading producers Saudi Arabia and Venezuela are expected to meet with non-OPEC Mexico in February or early March to recommend policy for OPEC.

Some analysts think OPEC is already loosening the reins on output policy by unofficially leaking supplies to thirsty refiners.

A report last week from a leading industry consultant estimated that OPEC compliance with self-imposed supply curbs slipped to 76 percent in November and is ``probably close to 70 percent'' in December.

Washington's Petroleum Finance Corp said that OPEC's leading policy makers, led by Saudi Arabia, had in recent weeks sought to alleviate fears of shortages in the oil market.

-- Sam (jaggsduke@usa.net), January 24, 2000

Answers

It doesn't, today. It's old

LONDON, Jan 4 (Reuters)......

-- (4@5.6), January 24, 2000.


They turned the clocks back 4 years, just like Laurel & Hardy would have done. End result? Another fine mess, Ollie. The next question is. How long can we keep it quiet?

-- Earl (earl.shuholm@worldnet.att.net), January 24, 2000.

TPTB figure we are all asleep and don't know how to read and/or put 2 + 2 together. Or, as the media/ministry of propaganda would have it: Perception is reality. What's true today isn't the same as what was true yesterday....

-- Carl Jenkins (Somewherepress@aol.com), January 24, 2000.

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