news.ft.com By Carola Hoyos, Energy Correspondent Published: February 27 2003 1:18 | Last Updated: February 27 2003 1:18

Crude oil prices on Wednesday jumped to their highest level since the Gulf war as US commercial supplies dropped to the minimum level needed to maintain proper operations at refineries, storage facilities and pipelines.

The US Department of Energy revealed on Wednesday that US crude stocks fell 1m barrels to 271.9m barrels last week.

Supplies of heating oil fell 3.9m barrels to 36.1m barrels, 33 per cent below last year's levels, because of increased demand for heating oil due to cold weather in the north-eastern US.

In response, Nymex crude for April delivery surged $1.87, reaching $37.93, the highest since October 1990 when prices jumped to $41.15 a barrel following Iraq's invasion of Kuwait.

Nymex settled the day at $37.70 a barrel, up $1.64, while the London Brent benchmark gained 75 cents to $33.07 a barrel.

The rally was fueled by bullish news from Washington that made war in Iraq appear increasingly inevitable. President George W. Bush was on Wednesday expected to say that overthrowing Saddam Hussein would have a ripple effect in the Middle East and facilitate peace between Israel and the Palestinians.

US military action would almost certainly halt Iraq's 2m barrels per day of oil exports, adding to the void left by the slow recovery of Venezuela's exports following the country's debilitating general strike.

Nations in the Organisation of Petroleum Exporting Countries are already pumping extra crude oil, causing concern among traders that the world's spare capacity - mainly held by Saudi Arabia - has shrunk to only 1.5m barrels per day.

The most important weapon against a price spike in case of war is the stockpile of more than 1bn barrels of oil held by the US and other industrialised countries. Analyst expect governments to release 1m-2m barrels per day of their oil reserves as soon as war becomes apparent.

www.newsday.com By Tom Incantalupo Staff Writer

February 27, 2003 Home heating oil prices are the highest in three years on Long Island and in New York City -- and they might go still higher, experts say, before this dreadful winter is over.

The New York State Energy Research and Development Authority said the average price for home heating oil as of Tuesday was $1.952 in Nassau and Suffolk counties and $1.987 in the city. The state surveys full-service oil retailers; cash-on-delivery prices usually are lower.

In January and early February of 2000, prices had soared to about $2.20 a gallon during a cold snap, but quickly fell as the weather moderated.

This winter has been consistently colder than normal -- not just in the Northeast but in other regions and other countries where oil is consumed for heat. Meanwhile, the flow of crude and refined products from Venezuela, the fourth-largest supplier to this country, still is about 30 percent below normal because of a two-month strike by oil workers.

Fears of supply interruptions from a war with Iraq also are pushing up petroleum prices. In this area, last week's barge explosion near Staten Island further tightened supplies of heating oil.

"This is going to be from start to finish one expensive heating season,” said Joe Roy, Long Island coordinator for the New York Public Interest Research Group's fuel buyers cooperative.

Natural gas prices also have soared to near record levels, said Phil Flynn, senior market analyst at the energy trading firm Alaron Trading Corp. in Chicago. Spokesman Andrea Staub of KeySpan Energy Delivery said homeowners who heat and cook with natural gas will pay about 30 percent more this heating season than last, or about $1,155, in part because of the price increase but, mostly, she said, because of additional usage.

Kevin Rooney, executive director of the Oil Heat Institute of Long Island, estimates that the average bill for this season will be about 40 percent higher than last year, or about $1,224. About 80 percent of a typical home's annual oil use is burned during the heating season.

Flynn says heating oil prices could rise further if the weather stays colder than normal in coming weeks. "If this winter hangs around past St. Patrick's day,” he said, "it's going to be the spending of the green.”

abcnews.go.com The Associated Press CARACAS, Venezuela Feb. 26 —

A march by thousands of anti-government protesters forced the suspension of talks aimed at ending Venezuela's political turmoil Wednesday, while the U.S. Embassy beefed up security following "credible" threats.

Marching just days after the arrest of a leader of a crippling two-month strike, the demonstrators dared President Hugo Chavez's government to jail them, waving placards reading "Chavez, your mask is off, dictator!" and "Put us all in prison!"

Talks between government and opposition delegates were scheduled to begin mid-afternoon Wednesday, but the marchers' route passed by the negotiations venue, forcing their rescheduling until Thursday.

Protest leader Carlos Fernandez has been ordered under house arrest to face rebellion and other charges for leading the 63-day general strike against Chavez. Police are searching for strike co-leader and labor boss Carlos Ortega.

The protesters marched past the Fedecamaras business chamber of which Fernandez is president and ended at the labor confederation headquarters where Ortega is president. There were no reports of violence.

Meanwhile, the U.S. Embassy closed Wednesday after receiving "credible information of a threat to its security," a statement said. The closure came a day after two bombs ravaged Colombian and Spanish diplomatic missions, injuring four people and generating fears that the nation's political crisis was entering a more violent phase.

At a U.S. request, Venezuelan officials said they sent more than a dozen federal agents, national guardsmen and municipal police to boost security around the embassy, which wasn't expected to reopen until Friday.

"Practically all the security, protection and surveillance measures have been taken," said Dany Azuaje, police coordinator for the interior ministry.

No one claimed responsibility for Tuesday's bombings, which blew out ceilings and twisted metal street signs. Both sides in Venezuela's conflict blamed each other and the finger-pointing threatened to undermine Organization of American States-sponsored negotiations.

"Negotiations, it seems, are becoming less and less viable as the days go on," said Michael Shifter, an analyst at the Washington-based Inter-American Dialogue think tank.

Leaflets supporting Chavez were found near both blasts. They were seized on by the opposition as evidence that the attacks were carried out by government sympathizers.

Vice President Jose Vicente Rangel ridiculed these suggestions and said opponents of the president might have been involved.

Fernandez's arrest came just days after the sides signed an agreement rejecting violence and provocative language.

"The government is violating and walking all over the agreement that we signed when the ink has not even dried," said Americo Martin, one of the opposition delegates at the peace talks.

The opposition leader said he would fight the detention order. "I'm a political prisoner," he said from his home.

Chavez called Fernandez and Ortega "terrorists" on Sunday for commanding the opposition movement that paralyzed much of Venezuela and cost more than $4 billion, hitting the oil industry hardest.

He also lambasted representatives of the Spanish and Colombian governments, together with the United States and OAS Secretary General Cesar Gaviria, for "meddling in Venezuela's affairs." These comments, say opposition leaders, directly provoked the embassy attacks.

In a statement, government negotiators said they rejected any attempts to take Venezuela's internal politics to an outside arena. They warned of a "clear break within the opposition and the emergence of an ultra-radical sector which has definitively taken the shortcut of terrorism and risk."

biz.yahoo.com Press Release Source: Philip Morris USA Wednesday February 26, 7:13 pm ET

MIAMI--(BUSINESS WIRE)--Feb. 26, 2003--Florida's Third District Court of Appeal today affirmed the dismissal of a lawsuit on behalf of a Peruvian smoker, ruling that Florida was not the proper forum for such a suit.

The lawsuit was filed by Ada Dejo in Miami-Dade County Circuit Court in 2000 on behalf of her deceased father, a medical doctor who lived his entire life in Peru and never set foot in Florida.

The trial Court dismissed the case because none of the parties are based in Florida and there is no justification for permitting the "expenditure of Florida citizens' tax dollars for problems not occurring in Florida." The appellate court today affirmed the ruling on the basis of the trial Court's order.

William S. Ohlemeyer, Philip Morris USA Inc. vice president and associate general counsel, said the company was pleased that the Court recognized the unfairness of making an out-of-state corporation defend lawsuits in Florida that have nothing to do with the state or its residents.

The decision follows the recent dismissal of a suit in Florida by the Republic of Venezuela against various tobacco manufacturers seeking to recover the costs of providing medical treatment to injured smokers.

In rejecting those claims, the Third District Court of Appeal observed that, "it is inappropriate for a plaintiff to attempt to turn Miami-Dade County into the courthouse for the world."

Contact:

 David Tovar, 917/663-2144

ogj.pennnet.com By OGJ editors

WASHINGTON, DC, Feb. 26 -- Sec. of Energy Spencer Abraham said Tuesday that the US would release oil from the Strategic Petroleum Reserve only after consulting with its allies.

"We will make any decision only in consultation with our IEA [International Energy Agency] partners," he told the Senate Energy and Natural Resources Committee while testifying on his agency's fiscal year 2004 budget request.

"We do not believe it should be used to address price fluctuations," Abraham said. Responding to lawmakers' questions, Abraham reiterated that the White House's policy concerning the 600 million bbl stockpile is that it should only be used for a "severe" supply disruption, not to control prices.

Similarly, he said the department had no immediate plans to order withdrawals from the 2 million bbl Northeast home heating oil reserve. Some East Coast lawmakers and heating oil dealers have been urging DOE to draw down stocks. But Abraham said conditions do not yet warrant a release.

Heating oil for March delivery hit an all-time high of $1.1535/gal Monday on the New York Mercantile Exchange, surpassing the previous record of $1.15/gal in November 1979, before closing at $1.1467/gal, up 3.82¢ for the day (OGJ Online, Feb. 25, 2003). It then dropped 2.41¢ to $1.1226/gal Tuesday as traders took comfort from Abraham's testimony that the government could quickly to release US emergency oil reserves if Middle East oil supplies are disrupted by a war with Iraq (OGJ Online, Feb. 26, 2003).

However, DOE officials reported Wednesday that US inventories fell by 1 million bbl for crude, 3.1 million bbl for gasoline, and 3.9 million bbl for distillate during the week ended Feb. 21.

IEA officials said Tuesday they are monitoring market conditions and may call on members to release stocks if they feel oil producers cannot keep up with demand. But price levels alone won't trigger a response, they stressed.

The IEA charter calls on member countries to release their stocks if oil supplies are cut by more than 7%, but the agency said it has the authority to act below those levels if market conditions compel them to take action.

As part of its emergency contingency planning, IEA also calls on member countries to hold oil stocks equivalent to 90 days of net imports from the previous year. The US SPR currently holds 54 days of what DOE calls "import protection." But when combined with private stocks, the inventory available to US consumers is about 150 days of net import demand, according to DOE.

On Feb. 20, IEA said combined publicly and privately held stocks among its members now equal about 115 days of total net imports, about 25 million b/d. The stocks, held as both crude and product, are near IEA members' refineries and distribution points and "can be made available rapidly to markets," the agency said.

The US Energy Information Administration estimated earlier this month that OPEC (Organization of Petroleum Exporting Countries), excluding Iraq and Venezuela, has 2-2.5 million b/d of excess oil production capacity that could be brought onstream. About 70% of the spare capacity is in Saudi Arabia with nearly all the rest in other Persian Gulf countries.

Venezuela predictions At the hearing, Abraham also responded to questions from lawmakers on Venezuelan oil supplies. The DOE secretary said it could be 2-3 months before the US import levels are at pre-strike levels. Venezuela historically has been one of the US' top suppliers; last year it averaged 1.5 million b/d but levels have fallen dramatically since then.

Earlier this week Venezuela's state oil company Petroleos de Venezuela SA lifted "force majeure" restrictions on some of its crude export contracts. PDVSA officials said production is now at 2 million b/d, the highest level since the start of the nationwide strike Dec. 2. Former PDVSA officials dispute those numbers, saying production is at 1.5 million b/d. Since the strike about 40% of the PDVSA workforce, mainly managers, have been dismissed for their role in organizing protests against the country's president Hugo Chávez.

Even with the prospects of more Venezuelan crude, market conditions remain fragile, and EIA expects price volatility to continue in the near term given the ongoing political situation in Venezuela and possible military action in Iraq creating uncertainty.

Inventories for both crude and product within the US likely will remain below historical levels, the agency noted.

EIA said Wednesday that despite market expectations of rising US crude oil imports, at 8.3 million b/d during the week of Feb. 21, imports actually dropped 400,000 b/d. Lower imports resulted in crude oil inventories being drawn down by 1.0 million bbl to keep crude refinery inputs averaging 14.5 million bbl. The agency said that over the past 5 week period ending Feb. 21 total petroleum product inventories have plummeted by more than 45 million bbl, about 1.3 million b/d.

"With crude imports averaging closer to 8 million b/d as opposed to 9 million b/d day, crude oil inventories and product inventories (as a result of lower production levels) are likely to remain low for quite some time or at least until oil demand drops significantly for a sustained period," EIA said.