(October 12 – 16:50 ET) –
Analysts at Salomon Smith Barney
in New York predict US$19 oil in
2000, bringing improved refining
margins in the next year.

Salomon says that refining
margins will come in 40% to 45%
below their 10-year averages in
1999. The firm expects that to
improve to 10% to 15% next year.
Still, it doesn’t see the sector
getting back to 10-year average
levels in 2000. It suggests that
consensus earnings estimates on
refining firms may be understated,
and refiners could benefit at the
expense of oil drillers.

The Salomon analysts say the
market could absorb some increased
production, but the psychological
effects will be negative for oil
prices. While it is sticking with
its US$19 price target, it admits
that Venezuela may well boost
production 10% to 15% in March or
April. That could weaken prices
at least temporarily.

-IE Staff