Word: petroleum
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...been a long time since the 13 members of the Organization of Petroleum Exporting Countries were unable to sell every barrel of crude they pumped, or since oil companies such as Exxon, Mobil Oil and Gulf Oil suffered from declining profits and bulging inventories. But that is precisely the situation in the suddenly upside-down world oil market. Skyrocketing prices and sagging demand have brought on a continuing petroleum mini-glut...
...company inventories around the world are now swelling with a surplus of excess production that oilmen estimate may amount to as much as 1 million to 2 million bbl. of daily output. The situation is particularly pronounced in the U.S., where petroleum consumption dropped by 5.2% in the first quarter, after declining by 8% last year...
Industry analysts predict that as a result of the weak market, first-quarter earnings, which the companies will begin to release this week, will be down sharply. Said Dillard Spriggs of New York's Petroleum Analysis Ltd. research house: "Virtually every company will be affected by the downturn." Exxon and Mobil are expected to see earnings drop about 25%, while Gulfs earnings may decline more than 40%. Overall, of course, Big Oil will still remain very profitable. Some companies, such as Standard Oil of California, may well show modest increases over first-quarter 1980 profits, which were enormous...
Faced with large supplies and low sales, oil companies are paying lower prices for crude or refusing to buy it. Standard Oil of California, which markets under the Chevron brand, Phillips Petroleum and Marathon Oil have all announced that they are cutting by $1 per bbl. the amount they will pay for certain grades of domestically produced crude. Atlantic Richfield has reduced purchases from Nigeria by 60,000 bbl. a day, and industry experts say that Ashland Oil has indefinitely suspended purchases of some 90,000 bbl. a day of crude from Mexico, along with another 17,000 bbl. daily...
...least, is holding output high and depressing prices, ostensibly to force other OPEC members to support a Saudi plan to link the price of oil to inflation and the value of key world currencies. Such a pricing formula would bring about a moderate but steady long-term rise in petroleum prices...