Oil on rise as Gaza flares again Jim Armitage, Evening Standard 17 October 2000

il prices edged up in nervous trading after renewed violence on the ground in the Gaza Strip meant few investors were prepared to take the Middle East summit deal as a guarantee of peace.

After yo-yoing for much of the session, December Brent was 44 cents a barrel stronger at $31.32 having pared back earlier 77 cent gains.

GNI trader Rob Laughlin said: 'The markets are reacting cautiously. Just because there's a possible agreement between leaders doesn't mean it will feed through onto the streets. We are nervously bearish about the oil price.'

US and Egypt-brokered talks with Israeli Prime Minister Ehud Barak and Palestinian leader Yasser Arafat went on for 17 hours yesterday but failed to resolve the issue of an inquiry into the cause of the latest violence.

However, the statement agreed by both sides today went some way towards calming fears of an escalation of the conflict.

GNI researchers said if an effective peaceful settlement is reached, oil could fall back to $27 or $28 a barrel. If violence grows despite the political agreement, it could have a catastrophic effect on the oil price just as the northern US states head into colder weather.

As the London-based Centre for Global Energy Studies said in its monthly report: 'Whatever happens, the oil market will remain tight over the coming winter.'

Meanwhile, the euro spent another session below the 85 cents mark at around 84.80. Analysts were still shaking their heads in disbelief over European Central Bank president Wim Duisenberg's comments suggesting further intervention was unlikely.

In what could be seen as a damage limitation exercise, German finance minister Hans Eichel said intervention remained a weapon for the ECB. But Bank of America economist Jeremy Hawkins said: 'There is a growing sense that the ECB - or at least the ECB president - does not know how to communicate with the market. In a PR context, recent developments have been little short of a disaster.'

Further bad news from the ECB came as euro-zone inflation was shown to have jumped to a six-year high of 2.8% in September - well above the central bank's 2% long-term ceiling.

With the euro within a whisker of its all-time trough of 84.40 cents, traders started speculating on the possibility of new record lows. Stop-losses around the 84 level would lead to rapid further falls.

The pound slipped to three-week lows against the dollar at 1.4338, later edging back up to 1.4387. The Middle East summit's relative success meant safe haven-sterling was seen as less necessary.

http://www.thisismoney.com/20001017/nm22256.html

-- Martin Thompson (mthom1927@aol.com), October 17, 2000

Answers

I don't think this alleged peace accord is going to mean diddly squat. I expect the Palestinians to still be throwing rocks and loading their sling shots on election day--thus, having a profound effect on the price of oil, and the election.

-- Uncle Fred (dogboy45@bigfoot.com), October 17, 2000.