www.forbes.com Reuters, 02.05.03, 3:23 PM ET By Patrick Markey

CARACAS, Venezuela, Feb 5 (Reuters) - Opponents of Venezuelan President Hugo Chavez said on Wednesday they feared the leftist leader would use planned foreign exchange controls as a political weapon to repress them after they failed to oust him with a two-month strike. Venezuela's government suspended currency trading two weeks ago while it drafted the controls to protect its reserves and the bolivar currency after the opposition strike cut off its economic lifeline by slashing vital oil production. Chavez, clearly buoyed by the limited restart of the oil sector, warned foes he would go on the offensive and ordered restricted access to U.S. dollars for the business leaders and opponents he accuses of trying to topple him. "There can be no pardon here. There will be no negotiation with traitors or with terrorists. We don't negotiate our principles," the president told supporters late on Tuesday. Chavez is locked in a bitter struggle with opponents who are pressing for elections to oust a leader they say rules like a dictator and wants to install Cuban-style communism. He has resisted calls for an early vote. Since Chavez's 1998 election on a populist platform, his fierce anti-capitalist rhetoric and threats against private property have riled foes who accuse him of driving the nation into economic chaos. Finance Minister Tobias Nobrega last week said the government planned to introduce a fixed exchange rate that would be adjusted monthly. Officials said priority access to dollars would go to fuel, medicine and food imports. Currency markets are scheduled to reopen on Thursday, but sources said the government was still wrangling over the final details of the control regime. Anti-Chavez business leaders said they feared draconian currency controls would be used to punish strikers by restricting access to dollars. Venezuela imports more than 60 percent of its goods and many businesses need the U.S. currency to purchase products from overseas partners. "This will be a political tool. This regime is doing everything to finish off the private sector, said Albis Munoz, vice president of the Fedecamaras business chamber. The strike, started on Dec. 2 by unions, private sector leaders and opposition parties, battered the oil-reliant economy. But the stoppage later faltered and most businesses have since reopened. Only state oil workers are staying out. Chavez has sacked more than 5,000 state oil employees in a strike-breaking offensive to restart exports. But strikers say oil production still stands at just over a third of the normal 3.1 million barrels per day. ECONOMIC JITTERS, SLIDING CURRENCY Chavez, who survived a coup last year, is defiant in the face of an opposition he sees as divided and without clear leadership. He has vowed to strengthen his self-styled "revolution" aimed at easing poverty. A six-nation group, led by the United States and Brazil, is backing efforts by the Organization of American States to broker a deal to end the political dispute over the president's rule. But Chavez rejects opposition calls for a constitutional amendment that would shorten his term and trigger early elections. He says they must wait for a referendum after August -- halfway through his current term. Economists say currency controls may initially help Venezuela stave off economic crisis and keep up its foreign debt payments. But they say exchange curbs and price controls hamstring the private sector and push up prices. "This will deepen the recession, halt recuperation by limiting access to currency and hike inflation," said Orlando Ochoa, economics professor at Catholic University in Caracas. Nervous demand for U.S. dollars sent the local bolivar currency <VEBFIX=> tumbling 24 percent from the start of the year until the government suspended trading on Jan. 22. Venezuela's reserves dipped $670 million dollars from the start of the year and $1.23 billion since the strike began. The reserves stood at $11.26 billion on Feb. 3. While the initial fixed rate has not been released, sources say it will be set between 1,600 and 1,800 bolivars to the dollar. The bolivar last traded at 1,853 to the dollar. Venezuela last had exchange controls during a banking crisis from 1994 to 1996 until it reached an accord with the International Monetary Fund. The controls fostered a thriving black market, with currency trading conducted through private accounts and Brady bonds. A black market has already surfaced, with the bolivar trading at 2,200 to 3,000 bolivars to the dollar. Prices on many goods have spiked as businesses bet they will be forced to pay more for imports ranging from televisions to baby foods.

sg.biz.yahoo.com Thursday February 6, 3:57 AM

CARACAS (Dow Jones)--Venezuela's crude oil output fell to 1.04 million barrels per day (b/d) Wednesday, compared with around 1.22 million b/d Tuesday, dissident staff of state-owned oil monopoly Petroleos de Venezuela (E.PVZ) said Wednesday.

The biggest decline was noted in the eastern part of the country where 692,000 b/d is being produced, compared to 852,000 the previous days. The decline is due to maintenance work at fields that had been virtually pumping at capacity in Monagas State, one industry source said. "This is what it is going to be like in the coming weeks - production will vary," the source said on condition of anonymity.

Another 300,000 b/d on top of the current 692,000 b/d could be produced in the east in the coming weeks, dissident PdVSA staff have said.

Production in the west stood at 260,000 b/d, compared to 280,000 b/d the previous days. In the southern region, 92,000 b/d were being produced.

(MORE) Dow Jones Newswires

02-05-03 1457ET

abcnews.go.com The Associated Press NEW YORK Feb. 5 —

The retail price of gasoline is up 8 percent since the start of the year, fueled by high oil costs and traders' self-fulfilling fears of an upward trend as the U.S. considers military action in Iraq.

"Traders are afraid that the next barrel they buy will be more expensive than the one they bought today," said Tom Kloza, director of the Oil Price Information Service, a Lakewood, N.J., publisher of industry data. That fear is contributing to the aggressive buying, he said.

The wholesale price of gasoline on the New York Mercantile Exchange rose 1.7 cent to $1.018 per gallon Wednesday afternoon, its highest level since May 2001. At the pump, the average price of regular unleaded gasoline is $1.53 per gallon, up 11 cents since the year began and 43 cents higher than a year ago.

Analysts said the main drivers on wholesale markets Wednesday were the latest government supply data and the case made against Iraq by Secretary of State Colin Powell.

Prices rose sharply early in the day after weekly Energy Department statistics showed thinning U.S. inventories of gasoline and distillates, which include diesel and heating oil.

Later in the day, prices retreated somewhat as traders determined that Powell's presentation had done little to sway key members of the U.N. Security Council that immediate military action in Iraq was needed. Representatives of China, Russia and France said the U.N. weapons inspectors' work should continue.

Aside from the threat of war in Iraq, the lengthy political and economic crises in Venezuela have also propped up world oil prices for months. The price of crude has been above $30 a barrel since mid-December and traded at $33.68 on Nymex Wednesday afternoon.

Venezuelan exports of crude oil and refined products have increased in recent weeks, but not enough to calm U.S. energy markets, analysts said.

Nationwide supplies of gasoline dwindled by 3.4 million barrels to 209.6 million barrels, or 5 percent below year-ago levels, according to the Energy Information Administration, the Energy Department's statistical arm. That slight shortfall does not fully explain why retail gasoline prices are 40 percent higher than last year, analysts said.

"We've got a market here being driven by psychological influences," said Peter Beutel of Cameron Hanover in New Canaan, Conn.

On the other hand, Beutel said the rise in heating oil prices is deservedly in response to diminishing supplies after several cold weeks of winter on the East Coast, where most of it is consumed.

Distillate supplies declined by 10.3 million barrels to 112.1 million barrels, or about 19 percent below last year's level, the EIA reported. The wholesale price of heating oil rose 1.6 cent Wednesday to 97.80 cents per gallon up 82 percent from last year.

Analysts said some refiners have reduced output in recent weeks in preparation for the shift from winter- to summer-grade fuel. The annual switch to cleaner-burning gas before the busy driving season requires shutting down equipment, scrubbing it clean and starting all over again a process that causes supplies to contract and prices to move higher even under the best conditions.

This year, the impact of these so-called turnarounds is being magnified by the possibility of a U.S.-led invasion of Iraq, analysts said.

"We're probably going to start the summer driving season at higher levels than we have in a long time," said Phil Flynn, an analyst at Alaron Trading in Chicago. "There's a lot of bad news in those inventory reports."

The biggest wild card is still the Iraq situation, Flynn said. "The general consensus is the sooner we get rid of Saddam Hussein, the sooner oil prices will come down."

abcnews.go.com The Associated Press NEW YORK Feb. 5 —

The retail price of gasoline is up 8 percent since the start of the year, fueled by high oil costs and traders' self-fulfilling fears of an upward trend as the U.S. considers military action in Iraq.

"Traders are afraid that the next barrel they buy will be more expensive than the one they bought today," said Tom Kloza, director of the Oil Price Information Service, a Lakewood, N.J., publisher of industry data. That fear is contributing to the aggressive buying, he said.

The wholesale price of gasoline on the New York Mercantile Exchange rose 1.7 cent to $1.018 per gallon Wednesday afternoon, its highest level since May 2001. At the pump, the average price of regular unleaded gasoline is $1.53 per gallon, up 11 cents since the year began and 43 cents higher than a year ago.

Analysts said the main drivers on wholesale markets Wednesday were the latest government supply data and the case made against Iraq by Secretary of State Colin Powell.

Prices rose sharply early in the day after weekly Energy Department statistics showed thinning U.S. inventories of gasoline and distillates, which include diesel and heating oil.

Later in the day, prices retreated somewhat as traders determined that Powell's presentation had done little to sway key members of the U.N. Security Council that immediate military action in Iraq was needed. Representatives of China, Russia and France said the U.N. weapons inspectors' work should continue.

Aside from the threat of war in Iraq, the lengthy political and economic crises in Venezuela have also propped up world oil prices for months. The price of crude has been above $30 a barrel since mid-December and traded at $33.68 on Nymex Wednesday afternoon.

Venezuelan exports of crude oil and refined products have increased in recent weeks, but not enough to calm U.S. energy markets, analysts said.

Nationwide supplies of gasoline dwindled by 3.4 million barrels to 209.6 million barrels, or 5 percent below year-ago levels, according to the Energy Information Administration, the Energy Department's statistical arm. That slight shortfall does not fully explain why retail gasoline prices are 40 percent higher than last year, analysts said.

"We've got a market here being driven by psychological influences," said Peter Beutel of Cameron Hanover in New Canaan, Conn.

On the other hand, Beutel said the rise in heating oil prices is deservedly in response to diminishing supplies after several cold weeks of winter on the East Coast, where most of it is consumed.

Distillate supplies declined by 10.3 million barrels to 112.1 million barrels, or about 19 percent below last year's level, the EIA reported. The wholesale price of heating oil rose 1.6 cent Wednesday to 97.80 cents per gallon up 82 percent from last year.

Analysts said some refiners have reduced output in recent weeks in preparation for the shift from winter- to summer-grade fuel. The annual switch to cleaner-burning gas before the busy driving season requires shutting down equipment, scrubbing it clean and starting all over again a process that causes supplies to contract and prices to move higher even under the best conditions.

This year, the impact of these so-called turnarounds is being magnified by the possibility of a U.S.-led invasion of Iraq, analysts said.

"We're probably going to start the summer driving season at higher levels than we have in a long time," said Phil Flynn, an analyst at Alaron Trading in Chicago. "There's a lot of bad news in those inventory reports."

The biggest wild card is still the Iraq situation, Flynn said. "The general consensus is the sooner we get rid of Saddam Hussein, the sooner oil prices will come down."

www.heraldtribune.com By The Associated Press ...... Feb. 4 Der Tagesspiegel, Berlin, Germany on the end of the general strike against Venezuelan President Hugo Chavez: At the moment all are claiming to have won. Hugo Chavez sees himself as the winner because the opposition has had to end its two-month-long strike. The protesters point out that the mediation of Jimmy Carter has forced him to agree to negotiations leading to a referendum which could more than halve his term in office. But in actual fact this power struggle has produced no victors, but only losers. The strike has cost Venezuela between 25 and 30 percent of its economic strength. Hundreds of businesses are bankrupt. It will take months for the economy to recover. ... ........ Feb. 4 Der Bund, Bern, Switzerland, on the general strike in Venezuela: It is hardly pure political reason that finally led the political opposition in Venezuela to give in. Instead, the strike front has been crumbling recently. More and more small businesses saw no sense in ruining the economy of the country and themselves for a power struggle that led nowhere.

President Chavez, who still has at his disposal an army of passionate supporters, proved to be completely unfazed by the weeks of mass protests. Even the economic demise of his country combined with the collapse of the crucially important oil sector were apparently less important to him than his personal claim to power. ...

Of course, Chavez now finds himself in a triumphant position. But his jubilation is naive and arrogant. Even if the referendum initiated by the opposition works in his favor, contrary to expectations, in the long term the president cannot afford to ignore the dissatisfaction of whole groups of the population.