www.usatoday.com Posted 1/21/2003 2:55 PM     Updated 1/21/2003 3:52 PM

NEW YORK (Reuters) — World oil prices set new two-year highs Tuesday amid growing fear of war in Iraq, holding strong though cracks started to appear in a Venezuelan strike that has cut deep into exports to the United States.

U.S. light crude on the New York Mercantile Exchange settled up 70 cents from Tuesday's close at $34.61 a barrel after hitting a peak of $35.20, the highest level since November 2000. London Brent blend rose 9 cents to $30.73 a barrel.

News from Venezuela that tanker pilots in Lake Maracaibo, a strategic export route, had ended their part in the nationwide strike briefly pulled prices lower; but the market bounced back, surging on fears that war in Iraq could disrupt Middle East oil flows.

With Venezuelan exports running at just 500,000 barrels a day, a fifth of normal levels, crude stockpiles in the United States have slid close to 26-year lows just as a fierce cold snap in the U.S. Northeast has boosted heating oil demand.

While an end to the tanker pilots' action in Venezuela could be expected to lift exports, shippers said deliveries were not likely to rise rapidly until foreign ship operators began using Venezuelan ports again.

Most of those in opposition to President Hugo Chavez extended their strike, aiming to force the leftist leader to resign and call immediate elections.

A spokeswoman for striking oil workers said they intended to send a senior representative to Maracaibo later Tuesday to try to persuade the pilots not to abandon their action.

"We still have 90% of oil workers on strike," she said.

Even an end to the strike might not bring immediate relief from a price spike that has deepened fears that rising energy costs could derail economic recovery.

"It will be a long, hard road for Venezuela even back to 75% of previous production capacity," said Geoff Pyne, consultant to Sempra Energy.

"There is still the threat of war in Iraq and stocks are very low. Traders are going to see it as dangerous to sell at this point."

Fears of war in Iraq, the world's eighth largest oil exporter, rose as President Bush said it was now clear to him that Iraqi leader Saddam Hussein was failing to comply with U.N. disarmament demands.

"He's delaying. He's deceiving. He's playing hide and seek with inspectors," Bush told reporters at the White House. "It's clear to me now that he is not disarming ... Time is running out."

Oil traders said the remarks appeared to leave little doubt that Washington was close to authorizing the use of military force against Baghdad.

Dealers are counting down toward a major report due Jan. 27 from U.N. weapons inspectors on whether Iraq has met its disarmament commitments. The 15-member Security Council is to evaluate the report Jan. 29.

OPEC's biggest producer, Saudi Arabia, already is tapping into the world's only significant spare capacity. Industry sources told Reuters over the weekend that Riyadh could be pumping 9 million barrels daily by February, up a million barrels a day from December flows.

"OPEC alone does not have sufficient, readily available spare capacity to replace both Venezuela's and Iraq's oil exports, much less to cope with any supply disruptions from other Gulf producers that might result from any prolonged conflict in Iraq," said London's Centre for Global Energy Studies

"A lack of adequate commercial oil stocks in the U.S. and no nearby replacement for lost short-haul crude from Venezuela has left the oil supply chain stretched almost to breaking point," it said in a report to clients.

If OPEC were unable to cover a dual outage from Iraq and Venezuela, the Paris-based International Energy Agency would be expected to release some of its emergency strategic reserves for the first time since Jan. 1991 during the Gulf War.

"Were an attack to be launched on Iraq, consuming country governments would have to utilize quickly their abundant strategic oil stocks to ensure adequate supplies," said the Centre.

www.stockhouse.ca 1/21/03 TORONTO, ONTARIO, Jan 21, 2003 (CCNMatthews via COMTEX) --

Denison Energy Inc. today issued an update on its operation and exploration activities during the fourth quarter of 2002.

The McClean uranium production facility was shut down on December 10, 2002 for vacations and routine annual maintenance after producing 6.1 million pounds of U3O8 in 2002, slightly over the budgeted production of 6.0 million pounds. Substantially all of the Company's share of production was sold under existing long-term contracts during the year. Sales this year are expected to be about 5% less than in 2002.

The McClean mill was restarted on schedule on January 6, 2003, with this year's U3O8 production budgeted at 6.0 million pounds from processing the ore in stockpiles from the previously mined-out Sue C and JEB pits.

No date has been set as yet for the hearing of the appeal filed by the CNSC and Cogema against the decision of the Trial Division of the Federal Court of Canada quashing the 1999 McClean operating license. The Federal Court of Appeal granted a stay of that decision in November and the McClean facility continues to operate normally under the four-year operating license issued in August 2001. Efforts to eliminate the uncertainty concerning the validity of the McClean operating license are continuing.

An 11,000 meter diamond drill program, involving in excess of 60 holes, is underway as part of the delineation of the Caribou Lake uranium discovery announced last winter. The program is designed to test for extensions of known mineralization and evaluate other nearby targets in this area, which is within 3 kilometers of the mined out Sue C pit. This year's exploration program is expected to be complete by the end of April.

The spot price for U3O8 climbed to US $10.20 in early January. We expect upward pressure through most of the year, but with significantly more volatility than last year, including periods of market weakness. While Denison does not sell on the spot market, the spot price affects the prices at which new long-term contracts can be obtained and reflects the tightening uranium supply where natural production has for several years totaled only between 50% and 60% of annual consumption.

The Company drilled or participated in the drilling of nine gross (7.14 net) oil and gas wells during the quarter of which four have been completed as gas wells and one as an oil producer. One gas well is still being evaluated.

Insufficient pipeline capacity in the area has so far prevented the three new Knappen gas wells from being put into production. However, some of the new gas will be on stream in early February. Efforts are continuing to obtain additional pipeline capacity to permit all of our gas wells to be operated at optimum rates in accordance with good oil and gas practice.

A fourth gas well, in which the Company has a 100% interest, is located in the Bow Island area in southeastern Alberta, and is expected to be put on production when pipeline capacity becomes available.

Our Lubicon well, located northwest of Edmonton, was completed as an oil producer in early December and has been producing at an initial rate of over 100 boepd. Additional offset drilling in this field is being assessed.

Our recent Skiff acquisition of 12.5% to 100% working interests in an oil property in the Conrad area in southeastern Alberta has been successfully incorporated into Denison's production operations. Production is increasing and plans are well underway to reinitiate pressure maintenance and thereby more effectively exploit this field.

Our Countess field remains our principal producer with current production of approximately 400 boepd.

Denison's year-end exit production rate was approximately 650 boepd (about 80% oil) with an additional 350 boepd of gas production shut- in awaiting pipeline capacity. The Company plans on drilling several additional exploration wells during the current quarter utilizing the $2.5 million remaining from the $5 million flow-through share issue that closed in the third quarter of 2002.

As a result of increasing oil and gas production combined with an active exploration program, Denison has made a number of key additions to our staff in Calgary. This month, Leif Snethun joined Denison as Manager, Exploration and Joe Stepaniuk as Manager, Oil and Gas Production and Facilities. They are both valuable additions to the team of Tony Boogmans, Terry O'Connor and Kevin Ryczak. Steve Ewaskiw, our Vice President, Oil and Gas Operations, resigned at the end of 2002 for personal reasons but continues to make his services available to the Company on a consulting basis.

Oil and gas prices have increased substantially in the later part of the year as a result of war fears in Iraq, labour and production problems in Venezuela, the recent cold weather throughout North America and falling inventories.

The news release contains forward-looking information with respect to Denison's operations and future financial results. Actual results may differ from expected results for a variety of reasons including factors discussed in the Company's Management Discussion and Analysis section of its 2001 Annual Report.

Denison Energy Inc. E. Peter Farmer President and Chief Executive Officer (416) 979-1991 Extension 231 Website: www.denisonenergy.com

NEWS RELEASE TRANSMITTED BY CCNMatthews

Copyright (C) 2003, Canadian Corporate News. All rights reserved.

news.ft.com By Andy Webb-Vidal in Caracas Published: January 21 2003 19:58 | Last Updated: January 21 2003 19:58

A seven-week oil workers' strike in Venezuela appeared to be weakening on Tuesday, although industry experts said it would be many weeks before the government of President Hugo Chávez was able to ramp up oil exports to anything close to pre-strike levels.

Tanker pilots in Lake Maracaibo, in the west of the country, were returning to work, shipping sources said. This development will allow employees at Petróleos de Venezuela (PDVSA), the state oil company to move several strike-bound vessels.

Since December, Venezuela, previously the world's fifth-largest oil exporter, has been shipping about a tenth of its pre-strike volume of 2.4m barrels per day, helping send oil prices to their highest level in two years.

Shipping sources said 70 per cent of pilots were now set to return to work, a move that was likely to lead to the normalisation of shipping activities in the crucial Lake Maracaibo area within the next week.

Horacio Medina, leader of the Unapetrol oil workers' union, which is aligned with the opposition-led drive aimed at forcing Mr Chávez to resign and call early elections, said the pilots had received a generous "offer" from the government.

The pilots' return is likely to prompt other dissident PDVSA employees, particularly blue-collar oilfield workers, to follow suit as morale weakens.

"This is the government's way of dividing and ruling, breaking up and paying off components that are critical to getting some of the crude exported," said Fareed Mohamedi of PFC Energy, a Washington-based consultancy.

The return of tanker pilots was a critical step that would allow non-PDVSA vessels to dock and load with crude oil, Mr Mohamedi said. "It would be a good start for the government. It needs to export anything it can."

But it was unclear on Tuesday how quickly the government would be able to break the strike in other sectors of the oil industry, and in turn lift crude oil output and exports.

Venezuela is currently producing 660,000 b/d of crude oil, according to dissident PDVSA managers, barely a fifth of the 3m b/d it was producing in November.

Permanent damage to as many as 20 per cent of the country's oil wells, a lack of experienced management and a cashflow crisis in PDVSA will render it impossible for the government to raise crude output above 1.5m b/d in less than three months, industry sources have warned.

news.ft.com By Carola Hoyos in New York and Adrienne Roberts in London Published: January 21 2003 20:04 | Last Updated: January 21 2003 20:04

Refiners are facing the possibility of being forced to reduce their operations as US crude oil inventories reach historic lows.

Inventory data to be released on Thursday are expected to show that the US's commercial levels of crude oil have dropped below the 270m-barrel level at which the distribution system of pipelines and oil storage tanks begins to falter.

Even without technical difficulties, refiners faced with diminishing profit margins because of low crude oil supply and high levels of gasoline stocks are considering slowing their operations, possibly foreshadowing an expensive season for US motorists this summer.

George Beranek, manager of market analysis at PFC Energy, a Washington-based consulting firm, expects refiners to slow down operations because of the recent supply squeeze caused by the crisis in Venezuela. That has taken more than 70m barrels of crude oil out of the world market.

Citgo, which relies on Pdvsa, Venezuela's state oil company and Citgo's parent, for half its crude oil, has been hardest hit, as have refiners that process Venezuela's heavy crude oil and for whom lighter grades from other Opec countries are imperfect substitutes.

According to the International Energy Agency, the US is not the only region to suffer from falling oil inventories, with European and Pacific supplies also showing significant losses.

Although Venezuela's exports are slowly increasing and US refiners welcomed Tuesday's news that oil tanker workers in western Venezuela were on the verge of going back to work, they warn that the interruption is far from over.

A breakthrough in Venezuela would be good news for US President George W. Bush, who has come under increased pressure to release some of the 600m barrels of the country's strategic reserves to help cool oil prices.

They have recently flirted with two-year highs because of Venezuela's woes and the possibility of war with Iraq.

But the Bush administration is keen to hold on to as many of its own extra barrels as possible following Opec's decision at its meeting in Vienna earlier this month to dip into its additional production capacity, promising to increase production by up to 1.5m b/d.

John Felmy, chief economist at the American Petroleum Institute, an industry group, agrees, arguing that the US needs to "keep its powder dry".

That will be especially important if the US intends to go to war in Iraq.

Venezuela's outage has prompted US refiners to rely increasingly on Iraqi crude oil exports in the past two months, and Opec has already made clear that it would find it difficult to make up for a loss in production from both Venezuela and Iraq.

Public oil supplies - government-controlled oil at the EIA's disposal in an emergency - are about 1.28bn barrels. This includes about 595m barrels in the US strategic petroleum reserve.

The IEA, which controls strategic oil reserves for 26 industrialised countries, says public oil stocks would be enough to cope with a crisis the size of the 1978-1979 Iranian revolution. That was the largest disruption in history and, analysts say, the closest precedent to a combined Venezuelan/Iraqi outage.

www.voanews.com VOA News 21 Jan 2003, 19:14 UTC

Venezuela's government has told two private television stations they are under investigation and face possible fines for airing commercials in support of the long-running general strike.

Officials in President Hugo Chavez's government informed Globovision and Radio Caracas Television Monday of the decision to open the inquiry.

The two stations responded by condemning the inquiry as an attack on press freedom. The development comes three days after Vice President Jose Vicente Rangel said the government was not considering shutting down the two media organizations.

President Chavez has long waged a bitter war of words against private local broadcast media and newspapers that have criticized his policies. He has accused media owners of being part of the opposition conspiring to overthrow his government.

Last September, two international media watchdog groups working in Venezuela said journalists there face a tough time because of verbal and physical attacks by supporters of President Chavez.

The Inter-American Press Association and International Press Institute gave that assessment, saying Venezuelan journalists are in danger of retaliation because they have been critical of the president's policies.

Some information for this report provided by Reuters and AP.