news.bbc.co.uk Monday, 13 January, 2003, 05:59 GMT

Increased supplies are little comfort for the US

Oil prices have remained unmoved as Organisation of the Petroleum Exporting Countries (Opec)'s agreement on Sunday to increase supplies is considered inadequate to meet US needs.

Oil has been trading at about $30 per barrel as a US war with Iraq and strike in Venezuela, the world's fifth largest exporter, has pushed US reserves to near 26-year lows.

Opec "stabilising" supplies

"There are delays in getting oil from the Middle East to the US," said David Thurtell, commodities strategist at the Commonwealth Bank in Sydney.

"The global market is going to remain tight with ongoing war fears," he added.

Deliveries from the Middle East take between four to six weeks to reach the US.

US light crude see-sawed in Asian trade, falling by almost 50 cents to $31.20 a barrel, then rising above its opening price before returning to $31.68 at 0512 GMT.

Trade on the International Petroleum Exchange (IPE) in London, the world's main oil market, begins at 0900 GMT.

Supply threats

The Venezuelan strike and the looming threat of war had pushed US crude prices to a two-year high of $33.65 at the end of December.

The high cost of oil could threaten the global economy which is still struggling to show any significant growth.

Oil shipments by Venezuela, the world's fifith biggest exporter which supplies 13% of US needs, still down to about 20% of normal export levels.

Iraq sells up to two million barrels per day on the international market but that would be stopped if there was a war.

Opec increased official production by 1.5 million barrels per day (bpd) during the emergency meeting in Vienna.

"Opec is trying to send a very strong message that it will do its utmost to stabilise demand and supply," said the cartel's president Abdullah bin Hamad Al Attiyah.

Another Opec meeting is scheduled on 11 March.

www.miami.com Posted on Mon, Jan. 13, 2003 BY CHRISTINA HOAG choag@herald.com

From airlines to oil refineries, traders to soft-drink bottlers, U.S. companies that do business with Venezuela are reeling from the effects of the South American nation's unrelenting 42-day-old national strike.

''We're all in pain,'' said Francisco González, president of the Venezuelan American Chamber of Commerce of the United States, which represents some 300 Venezuelan-linked businesses. ``It's worrisome. Some businesses have had to close, others are desperately looking for new clients.''

The strike, called Dec. 2 by opposition leaders to pressure leftist President Hugo Chávez out of power, has virtually shuttered Venezuela's commercial sector and paralyzed its vital oil exports.

Losses are now spilling over into South Florida, which has traditionally counted Venezuela as one of its top three international trading partners as well as a key source of shopping-loving tourists.

Under normal conditions, 50,000 Venezuelans come to Miami per month, typically spending $1,200 to $1,500 each. Visitors double over the December holidays, according to the Venezuelan Chamber.

But November witnessed the arrival of only 7,000 Venezuelans in Miami, González said. ''Do the math and you can see the loss in revenue for Miami-Dade County,'' he said.

New visa restrictions will choke that tourist market even further. Fearing an influx of visitors who don't want to return to a nation careening toward civil war, the State Department announced last month that the Caracas embassy will not renew or issue new visas to Venezuelan nationals as of Jan. 20.

Airlines have trimmed their operations accordingly. United Airlines shut down its office in the Venezuelan capital and canceled its daily Miami-Caracas flight, while American Airlines has suspended its routes to Caracas from Dallas/Fort Worth and San Juan, Puerto Rico, until Jan. 31.

For security reasons, the carrier has changed the schedules of its remaining four Miami-Caracas flights so crews and planes do not have to stay overnight in Venezuela.

The crisis, which shows no sign of abating, is exacting a particularly heavy toll on South Florida's trade sector.

''We have merchandise sitting in warehouses without possibility of shipping it,'' said Alberto Villegas, president of Pantrade, a Miami importer-exporter who relies on Venezuela for about 40 percent of his business. ``The shipping lines don't want to go there.''

The trade flow has dried up so completely that Xiomara Castillo decided to temporarily shutter her Hialeah export firm, Transoceanic Trade, which sends heavy machinery and parts to the country's state oil company Petróleos de Venezuela and mining firms.

''It's not safe to send the shipments,'' she said. ``The situation is very volatile, you don't know if the ports and customs are working or if there's gasoline for the truckers to deliver the goods.''

Ports are in fact technically open, said Bruce Brecheisen, vice president of Seaboard Marine in Miami, but that did not keep the shipping line from suspending sailings. ''We had to divert Venezuela-bound cargo to Cartagena, Colombia, and Río Haina in the Dominican Republic,'' he said. ``We're waiting for the situation to improve.''

The one item that Venezuelans are sending abroad is money. Coral Gables-based Commerce Bank, owned by Caracas' Mercantil Servicios Financieros, has recently seen a 25 to 50 percent spike in deposits from Venezuelan clients.

''The purchase of dollars by individuals has gone up,'' bank Chairman Guillermo Villar said. ``We're seeing more flow [of money] coming in.''

Oil companies wish that were the case. The strike has slowed the flow of petroleum from the world's fifth-largest oil exporter from 2.5 million barrels per day to 400,000.

The situation is difficult at Tulsa, Okla.-based Citgo Petroleum, which is wholly owned by Petróleos de Venezuela and receives about half of its crude from Venezuela. The company's four U.S. refineries process 865,000 barrels of oil a day to supply 14,000-plus gasoline stations across the United States.

The company has so far managed to keep pipelines flowing thanks to the spot market, but the crude crunch may get so severe that the U.S. government, a favorite target of Chávez's incendiary rhetoric, may have to bail it out as a matter of national security.

''We talked with the Department of Energy early on and told them we may reach a point where we may need to borrow from the Strategic Petroleum Reserve and repay it at a later date,'' spokesman Kent Young said. ``The DOE hasn't made a decision yet.''

Foreign companies operating in Venezuela are in a bind. They don't want to be seen as actively getting involved in domestic politics, but at the same time if they start operating, they run a risk of violent attacks.

Most multinationals are at a standstill simply due to practical reasons. Operations at Venezuela's Coca-Cola bottler, Miami-based Panamco, are involuntarily paralyzed as most employees cannot report to work due to scarce gasoline supplies, Chief Financial Officer Annette Franqui said.

''It's not feasible to operate,'' she said. ``We sold one day during the beginning of the strike, but right now plants are not operating. We don't want to produce because product becomes obsolete as we cannot guarantee delivery.''

With Venezuela's gross domestic product predicted to plummet a stunning 12 percent in the first quarter of 2003, Venezuelan business people -- such as Ariel Acosta-Rubio, president of the Churromanía fast-food franchise -- are looking to the United States for salvation.

Acosta-Rubio is set to open five new churro outlets throughout Florida by April. His 35 Venezuelan stores are under lock and key.

''The losses are gigantic. The franchisees call me every day, they don't know what to do,'' he said from his Brickell Avenue office. ``The business here is going to have to help the businesses there get back on their feet. Thank God for the United States!''

www.naplesnews.com Monday, January 13, 2003 By NEAL LIPSCHUTZ, Dow Jones Newswires

NEW YORK — Pardon this party pooper, but it seems particularly odd that U.S. equity markets finished slightly higher Friday to close off a pretty strong week.

After all, didn't we on Friday get a surprisingly downbeat report on the economy that said about 100,000 jobs were eliminated in December? That figure came in the face of forecasts for a 30,000 job increase. That figure, combined with a revised November jobs number, now means nearly 200,000 jobs fled the scene in the final two months of 2002.

Oh sure, you can talk about seasonal factors and how it affects retail hiring, which was probably soft this year in line with the prescient caution store owners showed given the sluggish holiday shopping season.

You can say there's problems with the numbers because of those seasonal adjustments. The fact is the government data are all we have to work with, imperfect as those figures are. And 200,000 jobs gone in two months is not usually good news for stock market bulls.

Optimism is always a good thing. But it would be a bit more reassuring if there was more tactile support for the buoyancy in spirits of investors this time around. Yes, the President did introduce a tax-cutting package this week that if enacted would, among other things, eliminate investor taxes on dividends. If enacted and over the long run, that should improve interest in the purchase of equities and is therefore bullish.

If enacted and over the long run are the operative phrases of the prior sentence. The tax cut plan, news reports aver, has a tough fight ahead in Congress. Meanwhile, many pundits doubt the near-term stimulating impact of the proposed stimulus plan.

Nothing has brightened on the geopolitical front, the dangers of which have been widely heralded as the cause for the overwhelming caution in the economy and the extended soft spot we are now experiencing.

The hostile words and nuclear worries surrounding North Korea, if anything, grew more ominous.

Nothing happened this week that makes war with Iraq less likely. Any conflict, of course, beyond the real human costs, also opens up endless possibilities for economic problems.

And there's more than Iraq to worry about if you are focusing on oil. Venezuela remains in an apparent twilight zone-style standoff between supporters and opponents of its president. The general strike there is reportedly still pretty much in place and the nation's oil production is way down.

Yes, members of the Organization of Petroleum Exporting Countries have said they will supply more oil and they meet this weekend in Vienna to discuss that issue. But OPEC ultimately works for its own interests, not those of oil consumers, even if it sometimes views those interests over a longer time frame.

Meanwhile, earnings reports for the fourth quarter are about to flood in from U.S. companies. Everyone knows the fourth quarter was weak, so will weak earnings be dismissed by optimistic stock investors as they are reported?

Maybe. There will be a lot of focus, as always, on what companies say about the current quarter, since the future is always more interesting and speculative than the past.

Employment, geopolitics and oil prices are all important. But in the end, its earnings growth that drives stock prices.

So maybe, given the healthy gains in share prices this week, investors are telling us that those earnings are finally about to turn around, if not in the current quarter, than in the next quarter.

Optimism is always a good thing. But it would be a bit more reassuring if there was more tactile support for the buoyancy in spirits of investors this time around.

Neal Lipschutz is senior editor, Americas, Dow Jones Newswires.

sg.biz.yahoo.com Monday January 13, 12:20 PM

SINGAPORE (Dow Jones)--Crude futures on New York Mercantile Exchange fell early Monday as after-hours Access trading commenced, in a knee-jerk reaction to news the Organization of Petroleum Exporting Countries will hike its output ceiling by 6.5% to stabilize jittery oil markets.

But crude futures subsequently managed to recover some of the earlier losses as participants realized the selling was overdone, and the size of the output hike was in line with what the market had been expecting.

But even though the OPEC output rise was within expectations, the news will continue to weigh on crude futures, participants say.

Select from the most reliable agencies  At 0410 GMT, the February Nymex contract was trading at US$31.56 a barrel, down 12 cents from Friday's floor trade close, after falling as much as 45 cents to US$31.23/bbl early in the session.

"Basically we sold off on the back of the OPEC news, and the general perception was that the market was overdone," said a Nymex broker, explaining the early losses in the session.

"But the market was expecting an increase of 1.5 million b/d, so there was no reason to sell off 50 cents at the open. The market overreacted to the headlines, because (an output hike of 1.5 million b/d) was already priced in," he added.

Most of the trading volume was from the U.S., with a total of 2,189 lots traded shortly before midday in Singapore.

"It could be that the U.S. (participants) are a little less aware of what's going on with OPEC ... and have pushed the market down. While in the Far East, Europe, (traders) have already priced it down," the broker said.

Range-Bound Trade Likely

For the rest of the Access trading session, Nymex crude futures will likely hold in a US$31.55-US$31.70/bbl, trending to slightly lower as news of the OPEC output hike puts a slight damper on market sentiment.

"Regardless of the fact that the market has already priced in (the 1.5 million b/d output hike), the news is going to cause a little bit of bearishness," the broker said, adding reports that Venezuela loaded a ship Friday also weighed on the market.

Good support will be provided at US$31.20/bbl, a consistent technical level "on the up and down swings over the last couple of weeks," the broker said. Beyond that, US$30.60/bbl will provide further support.

"At the moment we're in a little of a downtrend that's a week and a half old. To break out of that, we're looking at a move back up above US$32.40/bbl, and we have to get through US$32.60/bbl," he said. "But until we get through there, it's going to range trade and hover around current ranges."

On the London International Petroleum Exchange, Brent crude futures will also likely trend modestly lower. On Friday, nearby February Brent ended at US$29.67 a barrel, up 3 cents.

At its extraordinary meeting in Vienna Sunday, OPEC settled for a hike of its output ceiling by 1.5 million barrels a day to 24.5 million b/d, effective Feb. 1.

Oil prices have risen in recent weeks as the disruption to Venezuelan oil exports due to a prolonged strike in that country tightened supplies, notably to the key U.S. market.

Sunday's agreement was pushed through by Saudi Arabia, OPEC's largest exporter. Ali Naimi, the Saudi oil minister, said the supply shortfall resulting from the Venezuelan political crisis amounted to 2 million b/d.

He pledged that OPEC wouldn't allow an actual shortage of oil to develop.

The OPEC decision was swiftly followed up on Monday by the Saudis, who told South Korean costumers that in February they would supply more crude oil under their long-running term contracts than they had in January.

Saudi Arabian Oil Co. (C.SOI), or Saudi Aramco, made a 5% cut to February-loading term crude supplies to South Korea, compared with a much sharper 21%-22% cut for January's supplies, Seoul-based traders said Monday.

"The small cut means more term crude supplies given to us by Saudi Aramco, in line with OPEC's decision to increase output," a South Korean buyer said.

The same proportionate change is expected to apply to Saudi Arabia's February-loading term crude supply for Japan and Taiwan. Japanese markets are closed Monday.

-By Irene Kwek, Dow Jones Newswires; +65-64154062; irene.kwek@dowjones.com

www.chron.com Jan. 12, 2003, 10:09PM By MAE GHALWASH

The political, social and economic turbulence that started in April in Venezuela has sparked a patriotic fervor among members of the Venezuelan-American community in Houston, prompting them to reach out to each other and rediscover their culture.

Hundreds of Venezuelan-Americans have turned out for four major cultural and social gatherings -- during which not a hint of politics was raised -- since April, said Cristal Montanez Joslin, a spokeswoman for the Venezuelan-American Association of Texas, which arranged the events.

"Many people don't like political activities, so we have to work on what people like: the culture that is being lost," Joslin said.

"The culture is not being showcased or shared," she added. "It is our responsibility to develop the cultural talents within the community."

Venezuela's troubles began when clashes erupted over President Hugo Chavez's state oil policies. Chavez survived an earlier coup attempt, but the country remains divided over his rule. Chavez's opponents, mostly members of the elite oil sector, claim he is destroying the country's democracy and economy. His supporters, mostly the poor, accuse the oil giants of using the sector to augment their own bank accounts.

In December, oil workers started a strike to force Chavez from office, and the streets of Caracas have been filled with mass demonstrations in support of the strike and counterdemonstrations in support of Chavez. The strike has crippled Venezuela's oil production, the country's chief source of revenue. Venezuela is the Organization of Petroleum Exporting Countries' third-largest producer.

The tensions in Venezuela spread to Houston, with anti-Chavez activists staging demonstrations in front of the Venezuelan consulate, five in December alone.

Although those protests received wide local attention, each attracted just over 100 protesters, said Joslin. But nearly 500 Venezuelan-Americans attended each of four cultural and sporting events, Joslin said.

Some Venezuelan-American parents used the cultural events to introduce their American-raised children to their heritage. Children who did not read Spanish, or knew little of Venezuelan music, literature or dance, were soon reading and memorizing songs and poetry in Spanish to recite at the gatherings.

For one event, a children's choir was formed to sing Spanish songs, while other children performed Venezuela's national Joropo dance and still others performed in a musical recital featuring the Venezuelan cuatro, a small, guitar-like instrument.

The most popular of the events was a baseball game, which brought Venezuelan-American teenagers and their families together with others in their community, Joslin said. Some 500 people attended that event.

"I have met more Venezuelans since April than in my almost 25 years here in Houston," said Joslin.