www.channelnewsasia.com First created : 23 January 2003 0832 hrs (SST) 0032 hrs (GMT) Last modified : 23 January 2003 0832 hrs (SST) 0032 hrs (GMT)

Oil prices eased in New York dealings on Wednesday on signs of progress in efforts to end a strike by Venezuela oil tanker pilots, but fears of a war in Iraq kept market nerves taught.

However traders warned against reading too much into the market retreat, especially as a cold front hit the northeastern United States.Advertisement Moreover fears over a war in Iraq still haunted the market.

US leaders have expressed frustration at European-led opposition to a military strike against Iraq as the top US general said the United States can sustain a major force in the Gulf for several months if needed.

New York's light sweet crude March-dated contracts fell 34 cents to US$32.85 a barrel.

Earlier in London, the price of benchmark Brent North Sea crude oil for March delivery tumbled 37 cents to US$30.37 a barrel.

On Wednesday, the Algerian oil minister has warned that the Organisation of Petroleum Exporting Countries would not be able to compensate an expected shortfall of supplies of around five million barrels per day in the case of a war on Iraq before the Venezuelan strike ends.

asia.reuters.com Wed January 22, 2003 07:29 PM ET

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez said on Wednesday his government would introduce foreign exchange controls to halt capital flight and defend the country's bolivar currency, battered by a seven-week-old opposition strike.

"Together with the Central Bank, in accordance with the constitution, we will establish exchange controls to strengthen our international reserves and defend the bolivar," Chavez said in a speech at a military ceremony in Caracas.

He spoke hours after his government announced it was suspending foreign exchange trading for five market days from Wednesday while it prepared temporary restrictions on currency exchange and transfers to counter the financial damage caused by the strike, now in its eighth week.

Chavez did not give details of the controls being prepared.

Venezuela's bolivar currency has tumbled more than 28 percent during the shutdown and its international reserves have dipped since the crisis began. The strike has slashed oil output in the world's No. 5 petroleum exporter to a fraction of its normal levels.

www.miami.com Posted on Wed, Jan. 22, 2003 Associated Press

NEW YORK - Crude oil futures fell on both sides of the Atlantic on Wednesday as worries about supplies from Venezuela and Iraq eased somewhat.

On the New York Mercantile Exchange, nearby March crude slipped 34 cents to settle at $32.85 a barrel.

Petroleum products futures were mixed, with gasoline losing some ground and heating oil surging amid cold weather and a rally in natural gas futures.

February heating oil futures rose 1.72 cent to close at 91.19 cents a gallon. February gasoline closed with a loss of 0.17 cent at 89.93 cents a gallon.

On London's International Petroleum Exchange, March Brent closed down 40 cents at $30.34 per barrel.

Natural gas for February delivery gained 24 cents to settle at $5.673 per 1,000 cubic feet.

In Venezuela, signs of a crack in the eight-week old strike raised the prospect of a full resumption of output.

Tanker pilots who returned to work at Lake Maracaibo Tuesday refused to rejoin the strike despite efforts by dissident officials at state-owned Petroleos de Venezuela SA, or PdVSA, the port captain said Wednesday.

"All the pilots have remained firm in their decision to stay on their jobs," Angel Rivas Flores said.

Lake Maracaibo is a key export area. Two tankers were due to arrive at Maracaibo to lift crude, while four others were completing loading, he added.

But the status of the pilots remained far from clear. Another report indicated that the pilots might rejoin the strike in return for monetary compensation from the opposition.

The fate of the strike may depend on whether the pilots return to work, said Tim Evans, an analyst at IFR Pegasus in New York.

The strike has crippled Venezuela's oil production and exports. Venezuela exported about 3 million barrels a day of crude oil before the strike, nearly half of it to America.

Still, the government seems to be making modest progress in restoring oil production.

Output has risen to 714,000 barrels a day from 662,000 daily barrels just a couple of days ago, dissident PdVSA workers said.

The workers said earlier that they were willing to end the strike and normalize oil operations if an "electoral deal" is reached between the government and the opposition.

The opposition is demanding that President Hugo Chavez resign or call early elections. Chavez has hinted that he may accept early elections but only under the terms of Venezuela's constitution.

As the strike entered its eighth week, Chavez predicted Sunday that Venezuela's oil output would rise to about 2 million barrels a day by the end of January.

Regarding Iraq, while the U.S. continued to raise the prospects of military action, Saudi Arabia, the world's largest oil producer, issued a reassuring statement.

The Saudi ambassador to the U.S., Prince Bandar bin Sultan, said that his country stands ready to increase supply to ensure market stability.

"My government is ready to do more in the next two or three weeks if we see the oil price is not stabilizing and going down to $28 (a barrel)," Bandar told a meeting of the U.S. Conference of Mayors in Washington.

Saudi Arabia played a leading role in the recent decision by the Organization of Petroleum Exporting Countries to hike output quotas by 1.5 million daily barrels.

The OPEC move has done little to prevent oil prices from climbing to new two-year highs, in part because traders believe the extra oil won't reach the market in time to alleviate the supply shortfall created by the Venezuela crisis.

www.austin360.com By ALEXANDRA OLSON Associated Press Writer

CARACAS, Venezuela (AP)--In a setback for opposition efforts to oust Hugo Chavez, the Supreme Court on Wednesday indefinitely postponed a nationwide referendum that would have asked Venezuelans whether the president should quit.

Coming just 11 days before the scheduled vote, the decision stunned the opposition the opposition that delivered 2 million signatures in November to demand the referendum and backed it up with a strike that has lasted 52 days. It was also to pay for the vote because Chavez's government refused to do so.

Amid fears of an economic collapse, the Central Bank on Wednesday suspended trading in foreign currencies to stop a run on the bolivar currency. The suspension means Venezuelans cannot buy foreign currencies for five business days. The government said it would continue to pay its foreign debts.

Opposition leaders reacted angrily to the court's decision, contending that Chavez's government was acting through the court to cling to power despite international pressure to find an electoral solution to end Venezuela's political crisis.

Government leaders rejected the claim, noting that the opposition has embraced past court decisions against Chavez _ including a ruling clearing four high-ranking officers of rebellion charges in a brief April coup.

Justices ruled that no national vote--a referendum or election _ can be held until it decides whether elections council member Leonardo Pizani, who helped organize the referendum, is eligible to serve on the panel.

Pizani had resigned from the council in 2000, only to rejoin last November. He insisted he could rejoin because Congress, by law, had failed to formally accept his resignation.

Pro-Chavez lawmakers filed suit arguing that Pizani's two-year absence from the council made his resignation legally binding.

``This goes beyond my appointment, this is about politics,'' Pizani said after the ruling.

Chavez opponents vowed to step up street protests--a stark contrast to hopes raised Tuesday by Nobel Peace Prize laureate Jimmy Carter, who presented both sides with electoral proposals to end the crisis.

``Today there is a dictatorship in Venezuela,'' said lawmaker Julio Borges, whose First Justice party led the petition drive in November calling for the referendum.

The government doesn't care about the people's will,'' Borges said. It only cares about staying in power.''

Vice President Jose Vicente Rangel described the court decision as crucial. ``I hope all sectors of the country will respect and adhere to it,'' he said.

Chavez was scheduled to address the nation late Wednesday.

The referendum wouldn't be binding, but opponents hoped that a poor showing would increase political pressure on Chavez to quit.

Chavez argued that Venezuela's constitution allows a binding referendum midway through his six-year term, or August. Opponents cited a constitutional clause that allows citizens to petition for referendums on ``matters of national importance'' at any time.

The strike has slashed oil production in the world's fifth-largest petroleum exporter by more than two-thirds _ crippling an industry that provides half of government revenue and 70 percent of export revenue.

The decision to suspend trading in foreign currencies could strengthen the Venezuelan bolivar by limiting the amount of dollars that individuals and banks can buy. But they could also hurt businesses that depend on dollars to pay for imported goods. Venezuela's economy is highly dependent on imports--about 50 percent of food is imported.

Finance Minister Tobias Nobrega said he would announce a new foreign exchange policy next week--leading to speculation that the government would impose exchange controls.

Carter proposed two plans in Caracas on Tuesday.

The first calls for an end to the strike in exchange for a government pledge to amend Venezuela's constitution to shorten presidential and legislative terms of office and allow early elections.

The second plan calls for both sides to prepare for a binding referendum on Chavez's rule in August.

Diplomats from Brazil, Chile, Mexico, Portugal, Spain and the United States were to meet at the Organization of American States in Washington on Friday to discuss Carter's proposals. The six countries, called the ``Friends of Venezuela,'' are trying to strengthen mediation efforts by OAS Secretary General Cesar Gaviria.

Chavez was elected in 1998 and re-elected in 2000 on promises to help the country's poor majority, but he has failed to remedy the nation's economic ills.

Opponents blame Chavez's leftist policies for an estimated 8 percent economic contraction in 2002. Chavez blames it on opposition attempts to destabilize the country.

www.riyadhdaily.com.sa Thursday - 23 January 2003

OPEC will not be able to compensate an expected shortfall of supplies of around five million barrels per day (bpd) in case of war on Iraq, Algerian Oil Minister warned in remarks published Wednesday. Chakib Khelil told the Saudi newspaper Al-Watan that only two OPEC members, Saudi Arabia and the United Arab Emirates (UAE), have a real excess production capacity. "There is a question over OPEC capability to supply the market needs because the maximum available (extra) capacity is only three million bpd ... from Saudi Arabia and UAE," Khelil said. The shortfall would occur because of a marathon strike in Venezuela and the expected complete halt of Iraqi production if the United States attacks Baghdad. The OPEC oil cartel agreed on January 12 to increase oil production by 1.5 million bpd in a bid to curb a surge in prices triggered by the strike in Venezuela and the threat of war in Iraq.

This will raise the output ceiling of the Organization ofnPetroleum Exporting Countries from 23 million bpd to 24.5 millionnbpd, with effect from February 1, 2003. Khelil said the price hike is being driven by the tense political situation rather than supply and demand mechanism. The adjusted ceiling will be reviewed at the next OPEC ordinary meeting, on March 11. Meanwhile, oil prices trickled lower in early trading on signs of progress in efforts to end a strike by Venezuela oil tanker pilots, though the spectre of a war in Iraq continued to buttress the market. The price of benchmark Brent North Sea crude oil for March delivery fell to 30.54 dollars per barrel from 30.74 dollars at the close of the previous session.

In New York, light sweet crude February-dated contracts gained 70 cents to 34.61 dollars per barrel on Tuesday, when trade was largely technical owing to the expiry of the February contract which caught some investors short, traders said. Commerzbank analyst David Thomas said prices were sliding here "on the back of the Venezuelan news and the possibility that the strike has begun to crumble." The Lloyd’s List specialist publication reported that oil tanker pilots in Lake Maracaibo, in the west of the country, were returning to work. The pilots are key to oil exports from the lake, both for docking tankers and for navigating a long, narrow channel from the lake to the Caribbean, it noted. The report, which quoted unnamed shipping agents, said the end of the pilot’s strike meant that up to five tankers could leave the channel on one tide, versus two tankers now.