From the Dow Jones Newswires.

================== Commodities Crude-Oil Futures Advance On Concern Over Year 2000 By MATTHEW F. GALLAGHER Dow Jones Newswires

NEW YORK -- Crude-oil prices climbed for the third straight session at the New York Mercantile Exchange to set a 34-month high of $25.75 a barrel, as analysts began to express some concern about year-2000 supply glitches.

The December contract settled just under that high at $25.70 a barrel, with a 57-cent gain.

The Y2K talk was new to the market conversation, but even some skeptics conceded there were signs that petroleum stockpiling related to the new year was under way.

"We definitely have the sense homeowners are stockpiling heating oil ahead of Y2K," said Bill O'Grady, an energy analyst with A.G. Edwards in St. Louis. "And I think we'll see a run on gasoline in December."

One piece of data analysts focused on was the sharp drop in U.S. distillate stocks, which include heating oil, over the past month despite moderate to warm weather. Inventory data from the American Petroleum Institute released after the Nymex closed Tuesday showed distillate stocks down 10 million barrels since the week ended Oct. 15.

The potential for problems with computer chips in oil and petroleum-product pumping equipment, and with navigational instruments on tankers are some of the more prominent glitches talked about in the market.

Mr. O'Grady sees current fundamentals and Y2K concerns pushing nearby crude oil as high as $28 a barrel by the end of the year. Any actual Y2K disruptions in oil-producing nations could push prices well above $30 a barrel, he said.

The backbone of the most recent leg of the 1999 uptrend, though, has been evidence that output cuts by the Organization of Petroleum Exporting Countries are allowing strong demand to eat into world crude supplies, analysts said.

The API data provided further proof of that trend. In addition to the distillate decline, they showed a 2.29-million-barrel drop in U.S. crude-oil stocks to a tight 308.97 million barrels, and a large 4.95-million-barrel decline in gasoline stocks to 189.46 million barrels.

If these trends continue, energy prices are likely to be extremely vulnerable to any disruption in the product delivery system at the start of next year, A.G. Edwards's Mr. O'Grady said.

Crude-oil bulls reacted Tuesday to an expected meeting in Riyadh Wednesday of Saudi Arabian oil minister Ali Naimi, Mexican minister Luis Tellez and Venezuelan minister Ali Rodriguez. Ministers from these three countries first met in 1998 and engineered the output cuts that sparked crude's powerful recovery this year.

This time around, some analysts think the ministers are laying the ground work for an extension of those cuts beyond their phaseout date in March 2000. That speculation was bolstered by comments from several OPEC ministers supporting just such an extension.

With OPEC now expected to keep its cuts in place past a March 2000 phaseout date, concerns about supply shortages heading into the first quarter of 2000 are growing by the day, analysts said.

There is some talk in the market that higher oil prices will tempt OPEC members into cheating on their agreements. But one analyst said the group seems determined to further reduce world stocks, which are still above levels seen before the 1998 Asian financial crisis sharply reduced world oil demand.

"We're getting to a point where you hope OPEC does cheat to keep prices from the point where they damage the U.S. economy," said Tim Evans, an energy analyst with Pegasus Econometrics Group, a market research company in New York.

And analysts are rethinking the notion that OPEC wants prices no higher than $21 a barrel to prevent new sources of production from coming on line.

"The big drop in oil prices in 1997 and 1998 spooked a lot of people out of the oil market. There's a window now for OPEC to raise prices by cutting back production and not risk losing market share," said A.G Edwards's Mr. O'Grady.

-- Dave (dannco@hotmail.com), November 17, 1999

Answers

"We definitely have the sense homeowners are stockpiling heating oil ahead of Y2K," said Bill O'Grady, an energy analyst with A.G. Edwards in St. Louis. "And I think we'll see a run on gasoline in December."

Very interesting. I don't believe that there is a more conservative Brokerage than A.G. Edwards.

-- the Virginian (1@1.com), November 17, 1999.

I think the estimates are low for the statements made. This market is very critical for functioning everyday, and there may not be a rational price of oil in the immediate future. It should be just as easy to say $50 or $80. What difference does it make, as long as it eventually comes back to $25 and everyone gets what they want

-- Charles Jeffra (CJeffra@AOL.com), November 18, 1999.

Why don't the pollies bash these people and call them doomer and gloomers?

-- Larry (cobol.programmer@usa.net), November 18, 1999.