www.heraldtribune.com The Associated Press

Crude oil futures ended a volatile trading session Tuesday on a somewhat bullish note, as concerns about a war with Iraq took center stage.

On the New York Mercantile Exchange, February crude ended up 12 cents at $32.37 a barrel after trading in a range of $31.90 a barrel to $32.90 a barrel.

Petroleum-product futures ended mixed.

February heating oil surged 0.78 cent to close at 89.16 cents a gallon. February gasoline dropped 0.74 cent to 89.16 cents a gallon.

On London's International Petroleum Exchange, February Brent ended up 41 cents at $30.61 a barrel. The contract climbed to a two-year high of $31.25 a barrel earlier in the session.

Natural gas for February delivery fell 14.4 cents to close at $5.107 per 1,000 cubic feet.

"The market's sloppy," said Tim Evans, an energy analyst at IFR Pegasus. "The volatility is still substantial. We had a range of more than $1 and given that we retraced the whole range you could argue that you were in a $2 range."

Crude oil prices rallied early in reaction to a report that U.N. weapons inspectors had found evidence of Iraqi weapons smuggling.

Chief inspector Hans Blix, in an interview with the BBC broadcast late Monday, said his team of inspectors in Iraq had found several instances of illegal Iraqi weapons smuggling.

But Blix said inspectors have yet to determine whether the items are related to Iraq's weapons of mass destruction.

The upward momentum stalled after a U.N. spokesman said Blix, in speaking to the BBC, was merely repeating remarks he made to the Security Council last week.

"Inspectors have confirmed the presence of a relatively large number of missile engines, some imported as late as 2002," Blix said last week.

The news came as the U.S. continues with a military buildup in the Persian Gulf region in preparation for a possible war with Iraq. President Bush repeated his warning to Saddam Hussein to give up his weapons of mass destruction. Bush said he is "sick and tired" of Iraqi maneuvers and warned "time is running out." Iraq has declared that it is free of weapons of mass destruction. Western officials question the assertion.

Concern about a war with Iraq along with a seven-week strike in Venezuela have lifted oil prices above $32 a barrel to their highest level in two years.

To cover a supply shortfall caused by the strike in Venezuela, the Organization of Petroleum Exporting Countries agreed Sunday to boost output by 1.5 million barrels a day to 24.5 million barrels a day beginning Feb. 1.

There was also concern that U.S. crude oil inventories will decline as a result of the Venezuela strike.

Weekly inventory data from the American Petroleum Institute and the Department of Energy, due out early Wednesday, are expected to show a decline of 2 million barrels in crude oil stocks, according to a Dow Jones Newswires survey of analysts.

Evans said the market is likely to remain on edge as long as concerns about Venezuela and Iraq persist.

"It's still a dangerous market," Evans said. "At some point the OPEC production increase is going to catch up with this market and if we have any kind of a backing-away of a war posture with Iraq and if we see any end to the Venezuela strike, then this quickly becomes a bear market."

europe.cnn.com Tuesday, January 14, 2003 Posted: 2238 GMT

CARACAS, Venezuela (AP) -- The ongoing oil strike may have taken a deadly toll in rural Venezuela.

Seven people died and four suffered third degree burns Tuesday, when improperly stored gasoline exploded at a residence in the rural town of Tucani, located approximately 500 kilometers (300 miles) west of Caracas.

Fuel shortages caused by a six-week-old general strike have prompted many Venezuelans to stockpile gasoline using containers unfit for such purposes. Warnings by state authorities against inappropriate storage and transportation of gasoline have been largely ignored by the population.

"Three containers with gasoline exploded, but we still don't know what caused the explosion," said Oli Chacon, a spokeswoman for the Merida state firefighters, told The Associated Press in a telephone interview.

Opposition groups, including the country's leading trade union and business chamber, called the work stoppage on December 2nd, to force President Hugo Chavez from office.

Chavez, a former paratroop commander who was elected in 1999 and re-elected two years later, has downplayed calls for his resignation and fresh elections.

Food and fuel shortages caused by the strike have caused disturbances, many occurring in regions with insufficient fuel supplies.

On Monday night, dozens looking for propane cooking gas looted three businesses in the coastal town of Guiria, located 475 kilometers (285 miles) east of the capital.

Speaking on the condition of anonymity, an officer at the local National Guard garrison said three looters were injured when troops moved to restore order. Troops used tear gas to disperse looters.

Armed looters fired at electric transformers, the officer added, interrupting electricity in the town for five hours. Three were injured. No arrests were made.

www.alertnet.org 14 Jan 2003 21:29

CARACAS, Venezuela, Jan 14 (Reuters) - The 335,000 barrel per day (bpd) Curacao Isla refinery, shut last month due to a 44-day oil strike in neighboring Venezuela, may begin to restart operations next week, a plant spokeswoman said.

The plant, which is run by Venezuelan state oil firm Petroleos de Venezuela (PDVSA), was forced to shut in December because oil tankers were not receiving instructions from striking PDVSA staff.

Product tanks bulged with fuel that could not be exported, but stock levels have since been drained as replacement PDVSA employees nominated vessels to deliver some stored products to Venezuela.

"We've been reducing inventories and the situation is no longer critical. We are waiting to get commitments to take the products," the spokeswoman told Reuters.

Officials at the Isla refinery say the plant could begin processing next week when planned maintenance on one unit was completed, she added.

Isla normally processes around 200,000 bpd of Venezuela crude into products for PDVSA customers in the Caribbean and Central America.

However, PDVSA has been planning to import products from the restarted Curacao refinery to Venezuela, where the strike by opponents of President Hugo Chavez has forced the world's No. 5 oil exporter to purchase fuel abroad.

Runs in Venezuela's 1.3 million bpd refining system have been cut to 75,000 bpd due to the strike, which has the support of thousands of PDVSA workers.

www.upi.com By Carmen Gentile UPI Latin America Correspondent From the International Desk Published 1/14/2003 5:01 PM

SAO PAULO, Brazil, Jan. 14 (UPI) -- South American leaders readied themselves Tuesday for upcoming meetings in Ecuador that will focus on efforts at ending the weeks-long general strike that has crippled neighboring Venezuela.

Many of the continent's presidents will be on hand in Quito for the inauguration of Ecuador's new president, former Col. Lucio Gutierrez.

While Gutierrez's ceremonial ascension will dominate the local media, international eyes will likely focus on leaders' discussion whether to officially form a regional, multi-national "Friends of Venezuela Group" (Grupo de Paises Amigos da Venezuela) to help bring a peaceful end to the strike, daily protests and clashes between supporters and detractors of President Hugo Chavez.

The proposed coalition is the brainchild of new Brazilian President Luiz Inacio Lula da Silva, a leftist with strong ties to Chavez. Opponents of the Venezuelan president allege he has taken the nation too far to the left at the expense of the economy.

Other prominent leaders expected to attend are Colombia's Alvaro Uribe and Argentina's Eduardo Duhalde.

The Lula-led meeting of regional leaders has, however, drawn the ire of Washington, which had hoped to form its own "Friends of Venezuela" group to end the more than 40-day strike that has severely handicapped Venezuela's oil production capabilities.

A Washington Post article last week noted the Bush administration was hoping to head off the left-leaning Lula government's initiative, adding U.S. and foreign diplomatic sources were concerned that the effort would ultimately be counterproductive.

The U.S.-led effort would include Brazil, as well as the United States, Mexico, Chile and possibly Spain, and a representative of U.N. Secretary General Kofi Annan, the Post said.

U.S. State Department spokesman Richard Boucher recently explained the Bush administration's position on regional intervention in Venezuela.

"We don't think there needs to be some separate group of friends formed," he said.

Lula, as he is known, has maintained a non-adversarial, diplomatic position on the U.S. stance while moving ahead with the proposed meeting. His presidential spokesman, Andre Singer, said Tuesday the Friends of Venezuela Group "would be to support the negotiation effort by Organization of American States Secretary General Cesar Gaviria, to resolve the crisis in that country."

Gaviria had been mediating talks between the government and opposition leaders in recent weeks with little success. The effort is currently at a standstill due to a disagreement regarding the possible ouster of Chavez.

Singer also said Brazil's new Foreign Relations Minister Celso Amorim had spoken to Secretary of State Colin Powell about the upcoming meeting, though didn't expand on the specifics of the leaders' discussion.

"There is a convergence of opinion concerning the need to overcome the crisis in Venezuela," he said, but did not elaborate.

The Bush administration initially appeared apprehensive about interfering in the Venezuela crisis. Last spring, Washington came out in support of Chavez's ouster, only to have the Venezuelan president return to power a few days later.

But now it appears Bush is becoming increasingly interested in ending a strike that has denied the United States the more than 1 million barrels of oil a day it was receiving from Venezuela.

Despite the U.S. desire to play a role in ending the strike, Venezuela doesn't appear close to reaching a solution any time soon.

Chavez has been adamant about not bowing to opposition calls for him to step down and on Tuesday ordered soldiers to seize weapons from the Caracas police force, alleging they were siding with his detractors.

www.alertnet.org 15 Jan 2003 01:23

(Updates with Chavez comments)

By Pascal Fletcher

CARACAS, Venezuela, Jan 14 (Reuters) - One person was shot and wounded in clashes between rival Venezuelan protesters and police on Tuesday as President Hugo Chavez condemned leaders of a six-week-old opposition strike as "terrorists" and said he would not negotiate with them.

Chavez's comments indicated an apparent hardening of his government's position on the 44th day of the strike -- called to press the leftist leader to quit and hold early elections -- that has crippled oil output in the world's No 5 exporter.

The president spoke after scattered skirmishes in west Caracas, in which police fired tear gas and shotgun pellets to repel groups of pro-Chavez militants hurling rocks and bottles who moved to attack a march by anti-government protesters.

Chavez said the opposition could not be seen as having the same legitimacy as his government.

"We know it's not like that ... What we have here is a constitutional government facing subversion," he said at a ceremony to receive new leaders of the National Assembly.

He condemned his opponents as "elite and privileged sectors" which he said were bent on overthrowing him. "You can't negotiate with terrorists,' he said.

He was due to fly later to Quito to attend the inauguration Wednesday of Ecuador's new president, Lucio Gutierrez.

In Tuesday's clashes -- the third consecutive day of street violence -- Chavez supporters, some of them masked, stoned reporters, smashed the facade of a McDonald's restaurant and threw a Molotov cocktail at a TV news van, witnesses said.

One man was hit in the leg by a bullet but it was not clear who had fired it, city fire chief Rodolfo Briceno said.

Fighting to keep the two sides apart, police also used tear gas against some of the opposition protesters.

"FICTIONAL STRIKE"

Earlier, Vice President Jose Vicente Rangel told foreign correspondents the government aimed to rule until its term ended in 2007. "It's a 'fiction' strike, carried out by people who are obsessed with the idea that by staging a strike, they can get rid of Chavez," Rangel said.

He denied that the shutdown, which has closed many private businesses and caused shortages of gasoline and some food items, had created chaos. "The country is working," he said.

The country's bolivar currency <VEB=> fell 3.2 percent against the U.S. dollar on Tuesday to 1,612.50 bolivars. It has lost about 13 percent of its value this year.

Rangel condemned the oil industry disruption, which has cost the country $4 billion in lost revenue, as "sabotage" and "terrorism." The government has fired 2,000 striking state oil employees and is struggling to restore the industry to normal.

Rangel said the government objected to opposition plans to hold a nonbinding referendum on Feb. 2. Dismissing the poll as "unconstitutional and politically useless", he said the constitution only allowed for a binding referendum on the president's mandate after Aug. 19.

The government has appealed to the Supreme Court against the planned referendum, but Rangel said it would respect whatever decision the court took. Chavez has said he will not resign even if he massively loses the February poll.

Chavez's foes say he is trying to install a Cuban-style communist system. The opposition includes business and union leaders, striking oil executives and rebel military officers.

In a bid to break the deadlock, the United States and other countries are moving to set up a "friendly nations" group to back efforts by the Organization of American States to broker an agreement on elections. Mexico and Argentina said on Tuesday they were willing to form part of such a group.

The Venezuela crisis has helped push oil prices to two-year highs of over $30 a barrel as the market frets over supplies at a time when Washington is preparing a possible war in Iraq.

Before the strike, the United States had been receiving more than 13 percent of its oil imports from Venezuela.

(Additional reporting by Patrick Markey)