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Friday, September 08, 2006

ExxonMobil: A Case For $60 Oil?

Stocks: (XOM)(CVX)

Exxon announced yesterday that its field off the cost of Russia were ready to push out production that would help increase the company's output by 1 million barrels of oil and 1.5 billion feet of natural gas. The total is based on seven field that include production from West Africa, Qatar, The North Sea, and Malasia.

Just a few days ago, a group lead by Chevron said that is had begun drilling in the Gulf of Mexico, and that the field there could increase US oil reserves by 50%. The field could have as much as 15 billion barrels of oil and natural gas.

In addition, there are media reports that drivers are putting less miles on their cars. At least that is the argument as to why same-store sales at places like Wal-Mart are down. People are just driving less.

Of course, in Detroit, they are finding the cars with good mileage, especially from Toyota and Honda are eating into market share for the Big Three. So, there is a drive to build more cars that get 30 mpg or better, a hybrids.

There has been a lot of talk about $100 a barrel oil. Maybe that talk will turn in the direction of $60.

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

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