TEXACO FILING ADDS UNCERTAINTY IN OIL MARKET
U.S. oil traders said Texaco Inc's
filing for protection under the Chapter 11 bankruptcy code is
adding uncertainty to an already skittish oil market, but
opinions are divided on the impact to the market.
    "The filing is holding up wet barrel trading today," said
one trader. "Everyone is talking about it, assessing their
company's situations in relation to Texaco," he added.
     Some traders said companies that deal with Texaco are
concerned about whether they will receive payment or supplies
under the bankruptcy filing.
    However, others were less worried. "The first paid will be
the trading community and those connected with Texaco in the
shipping industry," one New York trader said.
    "If Texaco doesn't get crude supplies it can't run its
refineries, so its other assets would not be worth anything,"
he added.
    Texaco filed for protection under Chapter 11 of the U.S.
bankruptcy code yesterday after failing to reach a settlement
with Pennzoil on an 11 billion dlrs court award for illegally
interferring with Pennzoil's proposed purchase of Getty Oil Co.
    However, others were less worried. "The first paid will be
the trading community and those connected with Texaco in the
shipping industry," one New York trader said.
    "If Texaco doesn't get crude supplies it can't run its
refineries, so its other assets would not be worth anything,"
he added.
    Texaco filed for protection under Chapter 11 of the U.S.
bankruptcy code yesterday after failing to reach a settlement
with Pennzoil on an 11 billion dlrs court award for illegally
interferring with Pennzoil's proposed purchase of Getty Oil Co.
    "There is some reluctance to trade with Texaco but no great
change," said another trader, adding that traders are tending
toward prudence in their dealings with the company.
    Traders are assessing whether to require cash prepayment or
letters of credit, or to continue to trade as usual with Texaco
on an open line basis, he said.
    Another trader, however, described today's activity as
business as usual, adding that traders feel more secure because
no liens can be put on Texaco's assets while it is in
bankruptcy.
    Traders said there was no apparent effect of the Texaco
filing on crude futures trading although they said the exchange
might lower Texaco's position limit and require higher margins
for Texaco's trades.
    New York Mercantile Exchange President Rosemary McFadden
declined to comment on Texaco's futures trading, saying that is
is proprietary information. McFadden did say, however, that as
a matter of procedure, it is possible the exchange can lower
allowable position limits or increase margin requirements for
companies that are in financial trouble.
 Reuter
