New Britain herald., 1921-12-24


 dustry both from the point of view Of the commodity itself and secur- ties of the producing companies, ltog- CT w. Babsun makes the following statement;
 "The petroleum industry has been one of the last to respond to the con traCting economic cycle. Since early 1920 production has been well main tained, averaging far above war pro portions. In fact, at the present time 1t seems probable that the total out put for 1921 will rule in the vicinity Of 20,000,O ,OO0 barrels, over the record figure of 1920. As production has ignored fundamentals, 1t is not sur prising that stocks have advanced rapidly since the low point establish ed year ago, In January 1918, stocks on hand Of crude petroleum were about 150,000,Oo0 barrels. The end of the year found stocks depleted, ranging close to the 12S,000,000 bar rel level During 1919 there was not any material change and the low point in stocks was reached in May, 1920, approximately 124,000,00O bar rels. The recovery, however, has been rapid and stocks today are not far from 1S0,000,000 barrels, or the largest figure in history.
 The statistical position is extremely weak and there are no indications of any material improvement during the winter months. The immediate future constitutes a period during which con sumption is at a minimum, and this factor must be counteracted Jy fur ther marked contraction in output. There has been a great deal of prop aganda relative to the Mexican situ- aton, particularly as regards salt water in many of the leading pro ducing wells. l feel that this is largely the propaganda of oil interests in the endeavor to create a buying atmosphere. An official statement from Washington indicates that there is no marked basis for such a report and Mexican production today is on the increase.
 Imports of Mexican oil into this country this year have been the larg- est ever recorded. During the first ten months of the current year i'm ports exceeded 4.243, 932, ,000 gallons as against only 3,424,701, ,000 in 1920, and 1,SG7,332, ,000 in 1919. Prospects favor continuation of heavy imports of Mexican oil for some time to come. Moreover, the statement that the amount CT oil in Mexico is limited, is unfounded Mexico will prove an important factor in the petrolem sit uation for many years to come. On the export side of the question the trend is distinctly downward. During the first ten months of the current year exports of minerial oil averaged 2,341,5S40O0 gallons as against 2,533,- 374,000 during the same period in 1920, and 1890, $40, ,000 in 1919. Europe is not in a position to buy on war average and in all probability the trend of exports during the next year or so will be downward and not upward.
 "rhe industrial readjustment is by no means complete. This includes particularly the automobile industry, which still faces readjustment and competition, and perhaps lower prices in 1922 Industrial activity will come back only gradually, and the princi- pal sources of outlet in petroleum are by no means in a position to buy on an extensive and expanding scale. Conservatism will certainly prevail. Finally, looking at the price side of the question, the trend of petroleum, Mid Continent, Texas and PennsyI- Vania, could not hold up against the excessive supply, and during the first quarter of this year, broke materially. For example, Pennsylvania crude re- acted from S6.l0 in January, 1921, to low level of $2.25 in August. Since that time prices have advanced ap- prOxmately 100 per cent; but as pre- vi0usly minated, stocks have ad vanced radically, now 39 per cent more than at the low point last year. The recovery has stimulated new drillings and this fact will inevitably have direct effect upon the situa tion. The advance in petroleum has been entirely adverse to the statisti- cal and fundamental position, which I feel has been due to a large extent to manipulation. I question. wheth- CT petroleum can hold it's present level There is a marked possibility of a price reaction during the winter months unless there is a drastic cur tailment in production, a feature that
 
 principal by-products such as gaso- line, kerosene, lubricants, etc. are also in the same category as crude petrol cum, and should be regarded accord ingly.
 'I do not see how the securities of the producing companies can escape this same readjustment. From a high average price of 700 reached in 1920 the stocks of the oil companies came down to around zoo and are now up to about 525. At the present time they are less than half way back to the 1913-14 average level of 300 I can see no reason for any broad up- ward movement in oil stocks until they have been more thoroughly re- adjusted,
 ''The general business of the coun- try at large as reflected in the Bab.