money.cnn.com February 19, 2003: 2:33 PM EST

NEW YORK (Reuters) - U.S. oil prices rose for the sixth straight day Wednesday, hitting 29-month highs ahead of government inventory data expected to show crude stocks shrinking in the United States.

Cold weather in the world's biggest heating oil market in the U.S. Northeast also underpinned prices, which are just $4.00 shy of the all-time high set after Iraq invaded Kuwait in 1990.

U.S. crude futures rose 39 cents to $37.35 per barrel in New York, the highest since September 2000.

International benchmark Brent crude oil was up 1 cent to $32.55 per barrel in London, and just below a two-year high of $33.10 touched last week.

Traders said the market remains wary as the United States and Britain, despite strong international opposition, are pushing for a new U.N. resolution that would authorize the use of force to disarm Iraq.

But the new resolution may not be put to a vote before early March, after another report by chief U.N. weapons inspector Hans Blix, diplomats said Wednesday.

"The world is facing the prospect of losing Iraq's two million barrels per day of oil exports, and perhaps some of Kuwait's oil too, at a time when oil prices already are well above $30 per barrel and stocks are abnormally low," the Center for Global Energy Studies said in a monthly report.

President Bush shrugged off global anti-war demonstrations Tuesday, while Washington and London worked on a second United Nations resolution to sanction war if Iraq fails to disarm immediately.

The United States warned reluctant ally Turkey Wednesday that time is running out to agree to a deployment of U.S. troops on its soil as an Iraq invasion force as the two states wrangled over the size of a multi-billion-dollar aid package.

The U.S. Defense Department ordered another 28,000 troops to the Gulf region this week as it builds a force of more than 200,000 for a possible invasion of the Arab oil power.

Iraq is the world's eighth-biggest oil exporter, selling roughly two million barrels per day (bpd) into the international market, and traders fear war could disrupt supplies from other producers in the Middle East, which supply 40 percent of world exports.

The White House has said a new resolution could be proposed this week to the U.N. Security Council, where Bush has met opposition from France, Russia and China, who want more time for weapons inspections to continue. Tight supplies

Government data to be released Thursday are expected to show that U.S. crude oil stocks fell by a modest 1.0 million barrels, a Reuters survey of analysts showed.

Analysts also expected a draw of 3.0 million barrels in distillates, including heating oil, and a minor decline of 500,000 barrels in gasoline stocks.

Concerns over supply disruptions resulting from a war come at a time when strike-hit Venezuelan exports struggle to return to normal and senior oil workers in Nigeria walked out, although supplies from Africa's top producer have remained normal so far.

Venezuela's oil production was 1.4 million bpd Wednesday, roughly 50 percent of normal levels, despite government efforts to increase output.

Venezuela accounted for 13 percent of U.S. oil imports before the strike, aimed at toppling President Hugo Chavez, and the stoppage has severely dented U.S. fuel stocks.

U.S. stocks of crude oil already are below 270 million barrels, seen as the minimum level required to keep the nation's refineries running normally.

Supplies could be tightened further if there is an escalation in a Nigerian oil strike over pay and conditions that began Saturday but has not touched exports so far.

Nigeria pumps just over two million bpd and is the world's seventh-biggest exporter.  

www.alertnet.org 19 Feb 2003 19:00

NEW YORK, Feb 19 (Reuters) - An energy crunch that is dealing a blow to fuel consumers' pocketbooks proves the need for the United States to become more independent from unreliable foreign oil supplies, the American Petroleum Institute (API) said on Wednesday.

The Bush Administration has been attempting since 2001 to push through controversial aspects of the White House energy program that would increase domestic oil drilling, but it has met resistance from Democrats claiming the need for more petroleum does not justify the environmental costs.

"We're in the same fix we were in two years ago, and nothing's been done to fix the problems that existed then." said John Felmy, director of policy analysis and statistics at the API, which represents members of the oil industry.

"Our energy infrastructure is straining to meet the ever-growing demand, and when problems occur, like the ones we're seeing, we experience this volatility," he told Reuters.

Oil prices have spiked to within reach of two-year highs near $38 a a barrel, as a national strike in Venezuela cripples exports from the OPEC nation and the United States is hit with strong heating demand and fears over war on Iraq.

Retail gasoline prices have surged above record highs for February at $1.66 a gallon on average, while heating oil prices have hit three-year highs at $1.71 a gallon, leading to calls from petroleum distributors for a release from the nation's Strategic Petroleum Reserve (SPR).

The Bush administration said last week it was monitoring a drop in U.S. crude oil inventories, now the lowest in 27 years, but indicated there would be no release of oil from the SPR, which is used only in cases of severe disruption.

Against this backdrop, the Senate is expected to vote in mid-March on whether to open the Arctic National Wildlife Refuge (ANWR) to oil drilling -- the most controversial aspect of Bush's energy plan -- with supporters hoping to reverse last year's defeat and stressing the need for energy independence.

The Bush administration is pushing to open the refuge and tap its potential 16 billion barrels of oil to reduce U.S. dependence on crude imports, particularly as fears mount that a possible war with Iraq could disrupt supplies from the oil-rich Middle East.

But most Democrats and environmentalists oppose drilling in ANWR and want to protect the reserve's wildlife. They say there is not enough oil in the refuge to justify disturbing the area's wildlife, and argue the government should raise fuel mileage standards for sport utility vehicles.

www.forbes.com Reuters, 02.19.03, 1:00 PM ET

NEW YORK, Feb 19 (Reuters) - NYMEX crude oil futures hit fresh 29-month highs midday Wednesday, lifted by surging heating oil and gasoline futures, ahead of Thursday's inventory reports forecast to show draws for all three segments. Heating oil in the New York Harbor cash market remained strong on tight supplies, and bolstered futures, traders said. Gasoline futures firmed on Midwest refinery trouble and talk of another similar problem at a Texas refinery, traders said. At 12:50 p.m. EST (1750 GMT), NYMEX March crude was up 28 cents at $37.23 a barrel after soaring to $37.35, the highest for prompt crude since September 2000. It dipped to $36.36 early. NYMEX April crude gained 23 cents to $35.74 ahead of the March contract's expiry on Thursday. In London, April Brent was off 9 cents at $32.45 a barrel. Government oil inventory data to be released Thursday were expected to show that U.S. crude oil stocks fell modestly by 1.0 million barrels, a Reuters survey on Tuesday showed. Analysts also expected a draw of 3.0 million barrels in distillates, including heating oil and a minor decline of 500,000 barrels in gasoline stocks. "Gasoline is up because of expectations that tomorrow's weekly inventory data will show a stock draw as Venezuela seems to be taking the gasoline imports away from the United States," said Ed Silliere, energy market analyst at Energy Merchant LLC in New York. Silliere also cited a downed gasoline-making unit at BP Plc's <BP.L> (nyse: BP - news - people) 420,000 barrel per day refinery in Whiting, Indiana, as supportive. Other traders said there was talk of a fluid catalytic cracker down atthe ChevronTexaco (nyse: CVX - news - people) 90,000 bpd refinery in El Paso, Texas, also fueled buying in gasoline futures. The company said its policy is not to comment on such reports. Heating oil futures were supported by forecasts of colder weather returning to the U.S. Northeast, the biggest consumer of heating oil, by next week. Private weather forecaster Meteorologix said after above-normal temperatures Friday to Saturday in the U.S. Northeast, readings will turn below normal on Sunday. In the next 6 to 10 days, it expects regional temperatures to be much below normal. Traders said the market remains wary as the United States and Britain, despite strong international opposition, are pushing for a new U.N. resolution that would authorize the use of force to disarm Iraq. But the new resolution may not be put to a vote before early March, after another report by chief weapons inspector Hans Blix, diplomats said on Wednesday. Before deciding about launching a military strike against Iraq, the U.S. appears willing to devote a few weeks to getting international support, leading analysts and diplomats to believe a possible attack would not take place before mid-March. Meanwhile, the Nigerian government said an urgent meeting it called on ending a strike by senior oil workers had been postponed by one day, to Thursday, to allow union leaders more time to arrive. Earlier, Nigeria's Labor Minister Musa Gwadabe said the government would ask striking oil workers to call off their action immediately before any negotiations. The strike, launched Saturday, has so far not affected oil Nigeria's oil exports as replacement staff has taken over the striking workers at oil terminals. On Wednesday, OPEC said its oil production rose by 820,000 barrels a day (bpd) to 25.68 million bpd in January from December, as Saudi Arabia, Nigeria and Iran increased output to offset a decline in Venezuelan production. Venezuela, another OPEC member, is struggling to restore crude production curbed by a strike that started Dec 2. It supplied about 13 percent of U.S. daily oil imports before the strike. NYMEX March heating oil was up 2.36 cents at $1.0890 a gallon, trading between $1.055 and $1.093. NYMEX March gasoline gained 0.90 cent to $1.0035 a gallon, trading 98.00 cents to $1.02.

www.vheadline.com Posted: Wednesday, February 19, 2003 By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: Governments often approach the fight against poverty with strategies based on giving rather than on empowering the people to become producers. They claim that since the poor has no land, no money, no food, they should be given all of these things so that they can stop being poor.

Intentions might be good but giving does not work. It seems to produce initial positive results but, after a while, the poor revert to being poor. Still worse, poor and frustrated.  Land distribution and reform has been a recurrent theme in the fight against poverty in many developing countries . The record is, so far, not encouraging.

Some of the better experiences, such as those in Taiwan and South Korea, have included ingredients which are often absent in other land reform programs: financial credits and technical assistance.

In Venezuela the most ambitious land reform program in record was the one undertaken by Accion Democratica in the decade of the 1960s. It was a massive effort based in a detailed study made by the Agrarian Reform Commission. The program was executed entirely within the law. To support the program several Institutions were created or reinforced, such as the Agrarian National Institute, the Agricultural Bank and a Technical Assistance Division at the Ministry of Agriculture. Thousands of tractors were imported, together with other agricultural equipment. Most of the land distributed was public land but some private holdings were duly expropriated. The main efforts at land redistribution took place in the central portions of the country, in the Andes and in the States of Barinas and Portuguesa. Some were very successful such as the Turen Cooperative, in Portuguesa, which to this day is the Granary of Venezuela.

But it soon became evident that land reform does not yield instant results and that the effort has to be sustained over long periods of time to produce significant change.  Three years after starting the program, only 60,000 families had been given ownership titles, half of the target.  A modest 8% gain in agricultural output had been obtained. There is no doubt, however, that this program started by President Betancourt established a new class of small landholders in the country. By 1980 about 200000 families had been given ownership of land and, by 1985, a total of 316000 families were landowners. Very few, however, became organized in cooperatives. After this time, the Agrarian Reform lost drive and probably many of these rural families emigrated to the cities, after receiving little or no permanent government assistance.

Land reform in Venezuela, therefore, has a history. It did not start with Chavez. Moreover, what Chavez has done in this respect is almost nothing. The new Land Law is designed to attack private landowners but not to promote the well-being of the rural poor. The only program started by Chavez, The "Fundos Zamoranos", the Zamora Landholdings, has been a total failure due to the lack of financial and technical support. As a result the people involved in this modest program are now worse off and very angry with the government. They feel that they have been used for political propaganda and are now reacting openly against the program.

In general the failure of these programs has to do with the absence of commitment by the government after the initial ceremony of land "distribution" has been televised. The day after finds the colonies without water, without fertilizers, without guidance. The only thing that the government was interested in was the political impact of the initial events, usually adorned with a long speech by the President.

The efforts by this government to improve the lot of the rural poor are restricted to what the President improvises over TV. These improvisations usually die a merciful death or become laughable programs such as the conversion of rooftops into chicken coops. Others are simply absurd such as the Rural Kit, still in operation, a program through which each rural family obtained a Kit consisting of one pig, 100 chicks, a bag of cassava roots and a set of plows and hoes.

• Predictably the family would eat the pig and sell the chicks. This government advocates a return to  "conuco" farming, the most primitive form of agriculture used by the Arawaks of pre-colonial Venezuela.

These things need to be said in order to challenge the notion that President Chavez is a pioneer in Land Reform. Not only he is not a pioneer but he has done little besides talking about the issue. Today the Venezuelan rural poor are in  a  worse situation than before.

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email ppcvicep@telcel.net.ve

abcnews.go.com — By Tom Ashby

LONDON (Reuters) - Oil prices pulled back from 29-month highs Wednesday in light profit-taking as the United States and Britain worked on a U.N. mandate for war on Iraq.

A cold blast in the world's biggest heating oil market in the U.S. Northeast also underpinned prices, which are just $4.50 shy of an all-time high set after Iraq invaded Kuwait in 1990.

International benchmark Brent crude oil fell 29 cents to $32.25 per barrel, just below a two-year high of $33.10 touched last week.

U.S. crude futures dipped 33 cents to $36.63 a barrel, off a peak of $37.05 reached Tuesday, its highest level since September 2000.

Dealers reported light profit-taking after a blistering oil price rally over the last three months which has added 50 percent to the cost of crude.

"The world is facing the prospect of losing Iraq's two million barrels per day of oil exports, and perhaps some of Kuwait's oil too, at a time when oil prices are already well above $30 per barrel and stocks are abnormally low," said the Center for Global Energy Studies in a monthly report.

President Bush shrugged off global anti-war demonstrations Tuesday, while Washington and London worked on a second United Nations resolution to sanction war if Iraq fails to disarm immediately.

The United States warned its reluctant ally Turkey that time was running out to agree on the deployment on its soil of an Iraq invasion force of U.S. troops as the two states wrangled over the size of a multi-billion-dollar aid package.

The Defense Department ordered another 28,000 troops to the Gulf region this week as it builds a force of more than 200,000 for a possible invasion of the Arab oil power.

Iraq is the world's eighth biggest oil exporter, selling roughly two million barrels per day (bpd) into the international market, and traders fear war could disrupt supplies from other producers in the Middle East, which supply 40 percent of world exports.

The White House has said a new proposal could be proposed this week to the U.N. Security Council, where Bush has met opposition from France, Russia and China, who want more time for weapons inspections to continue.

TIGHT SUPPLIES AS NIGERIA DOWNS TOOLS

Concerns over supply disruptions resulting from a war come at a time when strike-hit Venezuelan exports struggle to return to normal and oil workers in Nigeria downed tools, although supplies from Africa's top producer have remained normal so far.

Venezuela's oil exports were running at about 1.3 million bpd Tuesday, roughly 50 percent of normal levels, despite government efforts to restore production.

Venezuela accounted for 13 percent of U.S. oil imports before the strike, aimed at toppling President Hugo Chavez, and the stoppage has severely dented U.S. fuel stocks, which are running at historic lows.

Analysts expect another decline across the board in U.S. oil supplies as Arctic temperatures battered the Northeast region stepping up demand for winter heating fuel.

U.S. stocks of crude oil are already below 270 million barrels, seen as the minimum level required to keep the nation's refineries running normally.

Supplies could be tightened further if there is an escalation in a strike over pay and conditions by Nigerian oil workers, which began Saturday but has not touched exports so far.

Nigeria pumps just over two million bpd and is the world's seventh biggest exporter.

Union and government officials are due to meet Wednesday to try and resolve the dispute.