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Oil Companies Fight For Profits

Business Brokerage War may be hell, but it can also be the saving grace for oil companies. President Bush's war on terrorism and the Israeli-Palestinian conflict have put a fire under crude oil prices. At more than $26 a barrel, crude prices in the second quarter ran about 30 percent above their historic average, although they were slightly below year-ago levels.

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Forex Broker That saved the major oil companies -- including Exxon Mobil Corp., ChevronTexaco Corp., and Conoco Inc. -- from a disastrous second quarter. To be sure, quarterly profits are expected to be down a steep 36 percent because of a deep slump in refining and marketing, but robust crude prices prevented things from being even worse.

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Online Brokerage "The quarter was a tale of two cities,'' said Michael Young, an analyst with Gerard Klauer Mattison & Co.

National brokers muscle in It's not just the local brokers who swoop in to make a profit on the Final Four. based Premiere Sports Travel, based RazorGator began buying up blocks of local hotel rooms years out. "As soon as the bid goes out, we're scouting the area and buying hotel rooms, " said David Lord, CEO of RazorGator, one of the nation's largest ticket brokers.

Real Estate Broker The problems the oil industry has experienced with refining and marketing, the so-called downstream, aren't new: Poor demand for jet fuel from airlines, mild weather and high raw material costs. But the slump is not hitting the industry as hard as it did in the first quarter, when profits were crushed down 67 percent.

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Agency Brokerage Spark "I would be very surprised to see losses again in the downstream, although it's going to be tough,'' said Fadel Gheit, an analyst with Fahnestock & Co. "These companies had every negative going for them and not many positives.''

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Business Broker Whether refining and marketing profits recover in the quarters ahead rests largely on how much motorists drive this summer and how cold the weather turns this winter.

Brokerage Account Some analysts are betting on a turnaround, while most see crude prices holding strong at least while the U.S. military remains in Afghanistan and threatening military action in Iraq.be down just 8 percent and by the fourth quarter they are forecast to be up 54 percent compared to a year earlier.

Stock Broker "If you have to invest, you should look to Exxon Mobil or BP,'' said Gheit. "Your money might not grow, but rest assured it's not going to be like a dot-com stock, especially with the outlook for the commodity price.''

Brokerage Online Stock Trading Shares of the major oil companies far outperformed the broader stock market in the quarter thanks to the war premium carried by energy prices. But make no mistake, they still have not done well.

Broker Justin Ticket The Standard & Poor's index of major oil companies dropped about 4 percent in the period -- a reassuring move only when compared to a nosedive in the broader stock market that took the S&P 500 index (.SPX) down 14 percent.

Real Estate Brokerage Fahnestock's Gheit, himself a former oil executive, takes a sober view of the industry he now covers as an analyst.

Commodity Broker "If you buy a basket of oil stocks you will be ahead of S&P 500 by at least double digits.'' said Gheit. ``But I cannot encourage an individual investor to invest to lose 5 percent.''

Brokerage House At the moment, only three of the 55 energy companies his brokerage covers carry ``buy'' ratings. The remainder have ``hold'' placed on them. Still, Exxon Mobil, the world's No. 1 publicly traded energy company, and other oil majors at least offer a safe haven for investors shell shocked by accounting frauds.

Real Estate Broker Exam If nothing else, said Gerard Klauer's Young, ``energy has been a great place to hide for the last several years.''

Brokerage Services Reuters - 7/13/2002

Topic: Petroleum Industry

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