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Tuesday, September 05, 2006

Chevron Strikes Oil, And Crude Could Drop?


Late word is that Chevron and its partners will successfully begin production from deep-water wells in the Gulf of Mexico. According to the WSJ, this would be the largest domestic oil field since the discovery of the Alaskan North Slope several decades ago.

The WSJ points out that the Gulf could have 15 billion barrels of oil, which would improve US reserves by 50%.

Still unclear is whether this news will force down prices of crude short-term, and whether expanded drilling in the region by other oil companies like Exxon will stabilize oil prices long-term. If so, it may relieve some of the pressure on the US economy and help embattled industries like the automotive and airline sectors.

Douglas A. McIntyre can be reached at He does not own securities in companies the he writes about.

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