Newspaper article THE JOURNAL RECORD

`It's Become a Crap Shoot,' / Analysts in Oil Futures Market Looking for Bottom

Newspaper article THE JOURNAL RECORD

`It's Become a Crap Shoot,' / Analysts in Oil Futures Market Looking for Bottom

Article excerpt

Analysts who try to call the shots in the oil futures market are digging themselves out from an avalanche of falling prices and an ac cumulation of international developments.

At week's end, crude oil for delivery in March was $3.10 a barrel below the previous Friday. The February contract, which went off the board on Tuesday, lost nearly $5 in a week's trading.

Ask an analyst for one of the brokerage houses where it will end, at what price or when the market will bottom out and most likely you'll hear a huge sigh, then a manly attempt to talk some sense about what one of them called ""the craziness of the last few days.''

""I don't know'' where prices will settle, Andrew Lebow, an analyst in New York with Shearson Lehman Brothers, said this week. ""The market's in a free-fall right now. There's no bottom in sight, even though it could bottom out today or tomorrow or anytime.''

""It's become a crap shoot,'' said analyst Nauman Barakat of Smith Barney, Harris Upham & Co.

Maybe the bottom will come within the month, he said, but who knows what the price will be.

Others said this past week may prove to have been the end of the slide, with some choppy trading days ahead and then some recovery.

What happens turns on such disparate factors as whether Great Britain cuts back its production of crude oil and the subjective feelings of oil futures traders at the New York Mercantile Exchange.

""The psychological issue is very important,'' said William Byers of Bear Stearns in New York. ""There was a $5 drop (within one week), but the supply and demand situation has not changed to that magnitude.''

""In the short term, we're very close to bottoming out,'' he said. ""The market has gone down a very large percentage in a very short period of time without any change in fundamentals.''

The fundamentals: Refinery output is 1 million barrels a day above what it was a year ago in this country; this winter is milder than normal; the Organization of Petroleum Exporting Countries says unless it gets help from non-OPEC nations in controling the production of crude oil, it will flood with world market with oil and let the prices fall; Great Britain says it will not lower its production.

On Thursday, crude oil futures prices tumbled the $1 limit for daily trading on the Mercantile Exchange, following a remark attributed to Saudi Arabia's Oil Minister Ahmed Zaki Yamani that without Britain's help in curbing production, prices could fall to less than $15 a barrel.

""I think Yamani's $15 statement was made to put pressure on the British,'' said Barakat. …

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