reuters.com Wed March 5, 2003 12:46 AM ET By Tanya Pang

SINGAPORE (Reuters) - Oil prices held steady on Wednesday with key data on the health of U.S. fuel stockpiles likely to drive direction in the short-term as the United Nations continued to debate possible war in Iraq.

U.S. light crude tip-toed two cents higher to $36.91 a barrel after Tuesday's $1.01 rally in New York.

U.S. crude prices have swung in a wide range of more than $4.50 in the last five trading days after the market touched a 12-year peak at $39.99 on February 27.

The prospect of a war in oil exporter Iraq comes at a time when crude stocks in the United States are hovering at levels not seen since the mid-1970s, increasing anxiety that the world's biggest oil consumer may face a supply crunch.

Apart from lower sales from strike-bound Venezuela, which normally supplies 13 percent of U.S. imports, traders fear war in Iraq may disrupt supplies from other producers in the Middle East, which pumps about 40 percent of globally traded crude oil.

The OPEC producers cartel has sent reassurances to the market that it will cover any shortfall to world supplies should a military attack on Iraq disrupt its crude exports of some two million barrels per day.

But traders and analysts say that most members of the Middle East-dominated group are already pumping at full speed and the Organization of the Petroleum Exporting Countries has little spare capacity to utilize, with the exception of kingpin producer Saudi Arabia.

"It is clear that the loss of Iraqi crude represents a real threat to the stability of the market and that its loss would be difficult to compensate for in the long term. This is where the greatest risk to the market lies," said independent oil analyst Simon Games-Thomas.

Tetsu Emori, chief strategist at Mitsui Bussan Futures in Tokyo, said: "We're looking for crude to move above $40 when the attack is launched on Iraq. Even if OPEC does increase production we still see supplies remaining tight."

The U.S. government Energy Information Administration (EIA) will release later on Wednesday its weekly status report on the health of U.S. fuel stocks, and analysts predicted crude supplies to increase slightly but for winter heating oil stocks to decrease.

In a Reuters poll, six analysts forecast U.S. crude inventories to show a rise of 1.25 million barrels as Saudi Arabia bumped up imports to its ally.

The survey showed stocks of distillates, including heating oil, falling by two million barrels with demand still running high as a severe spell of unusually cold temperatures continued.

Heating oil stocks fell below 100 million barrels last week for the first time in three years, EIA data showed.

Analysts pegged gasoline tanks declining by 500,000 barrels.

MORE TROOPS TO GULF

The United States ordered 60,000 more troops into the Gulf region on Tuesday in its preparations for a military strike on Iraq, which it says is not in full compliance with U.N. demands to disarm weapons of mass destruction.

The United States and Britain has already amassed a 250,000-strong force in the region.

Secretary of State Colin Powel said Washington was gaining support on the U.N. Security Council for a new resolution against Iraq, which at the weekend began to destroy its illegal al-Samoud 2 missiles.

Washington, backed by Britain and Spain, is meeting resistance for a new U.N. resolution permitting military force from Russia, France, China and Germany.

The United States hit a stumbling block in its preparations at the weekend when Turkey's parliament voted against the deployment of U.S. troops on its soil, which would have given access to northern Iraq.

Turkey's government said on Tuesday it was considering a second try at winning parliamentary approval.

www.tcpalm.com By Scott Samples staff writer March 5, 2003

FORT PIERCE -- They come from all over the globe, a virtual United Nations dressed in Speedos.

The handful of foreign athletes on the Indian River Community College swim team may come from different continents with different languages and cultures, but have this in common -- the pool and the desire to go fast in it.

So they leave places like Brazil, Columbia, Venezuela and as far away as South Africa to swim for the small junior-college in the United States with the big reputation for producing quality swimmers and national championships.

Today the Pioneers will begin defense of their National Junior College Athletic Association titles -- if the men win, it will be 29 consecutive championships and 20 for the women -- in what is truly a global effort.

"They have South Americans, Europeans, people from all around the world," said sophomore Camilo Becerra, a Colombian who swam for his country in the 2000 Olympic Games. "It gives foreign people a chance to come here and learn and train."

Which is why the Pioneers' roster lists swimmers from San Paulo, Brazil and Bloemfontein, South Africa, sandwiched between athletes from Vero Beach, Port St. Lucie and Stuart.

And with a small recruiting budget, IRCC relies on the swimmers themselves to replenish the supply of foreign aid.

"There's a lot of word of mouth," first-year coach Scott Kimmelman said. "You get lucky. You pick up a couple of these talented athletes. They call up their friends and say hey, we're swimming pretty well here at Indian River. Then they come up here after that."

Which is what Fernando Jacome did.

Now a freestyler at Florida State University, Jacome swam for Indian River from 2000-01. The Bucaramanga, Colombia, native swam with Becerra and knew current Pioneers freshman Carolina Sierra, and lured his countrymen to the school.

"We don't have as much support as the United States gives their athletes," said Becerra, who is already spreading the word back home about IRCC. "So you want to help (others) to compete."

But there's more to the move than simply swimming. There are different languages, foods, and ways of doing things, which can be harder for some to handle than for others.

"It wasn't much different than South Africa," Luke Wilkens said of his move. "I adapted pretty well, I didn't have any problems. I think for the (swimmers from South American countries) it would be more of a culture change."

Kimmelman, a long-time assistant at IRCC who is in his first-year as head coach, said he will often group one culture together to ease the transition. At the same time, the swimmers get immersed in American culture as part of the learning process.

"I thought it was going to be the same being here, but it's not," Sierra said. "People are totally different. At the beginning it's tough to get used to. I like it. It's just different."

One thing that doesn't change is the competition -- and not just from other teams, either. Kimmelman said he is only allowed three foreign scholarships for the men and three for the women. That frequently leaves some foreign swimmers without scholarship aid and forces them to compete with each other for it.

But the bottom line is winning, a fact that is hard to escape since each national championship team is commemorated on the walls surrounding the IRCC swimming complex.

The foreign swimmers know it, the same as the local ones. The word has been passed down to them, and they have already begun to pass it on to others back home.

"Someone helped me. I will help another," Sierra said. "We keep it going, like a chain."

-scott.samples@scripps.com

FOREIGN AID

Six swimmers who hail from outside the United States will try to help IRCC extend their dominance in National Junior College Athletic Association swimming.

Men's Team

• Teylor Arboleda, Venezuela, Fr., butterfly and individual medley
• Camilo Becerra, Colombia, So., freestyle and butterfly
• Alejandro Gomez, Venezuela, Fr., freestyle and backstroke
• Luke Wilkens, South Africa, So., freestyle and butterfly

Women's Team

• Joyce Fuhrman, Brazil, So., freestyle
• Carolina Sierra, Colombia, Fr., butterfly, backstroke and freestyle

www.chron.com March 4, 2003, 10:59PM

NEW YORK -- Crude oil futures rallied Tuesday, staging a sharp recovery after three straight sessions where prices declined on hopes that a war with Iraq could be averted.

Between Thursday and Monday, prices fell sharply as Iraq's increased cooperation with U.N. weapons inspectors and Turkey's rejection of access to U.S. troops sparked speculation that a U.S.-led attack on Iraq could be avoided, or at least delayed by several weeks.

But prices turned around Tuesday as the United States stepped up military preparations for a war and indicated it would seek U.N. Security Council approval of a resolution on military action next week, analysts said.

At the New York Mercantile Exchange, light, sweet crude for April delivery rose $1.01 to end at $36.89.

April heating oil futures ended up 1.26 cents at $1.0486 a gallon, while April gasoline futures climbed 1.74 cents to settle at $1.1122 a gallon.

Natural-gas futures fell for the second day in a row as above-normal temperatures in the Midwest and East were forecast to pare heating use. Gas for April delivery retreated 12.1 cents to settle at $7.041 per thousand cubic feet.

At London's International Petroleum Exchange, April Brent futures rose 61 cents to close at $33.09 a barrel.

Exxon Mobil Chairman Lee Raymond said Tuesday the Bush administration could release emergency crude reserves if there is war with Iraq, depending on the extent of disruption to oil supply.

"It's clear if there's going to be a war, then Iraq is going to stop exporting," Raymond told analysts in New York.

"The U.S. government could release some oil from the SPR," he added, referring to the strategic petroleum reserve, "I wouldn't want to suggest to you that there will be clarity on this at all. There are a lot of what ifs' and whens.' "

Energy traders worry that an attack on Iraq could disrupt the flow of oil from the Persian Gulf.

Meanwhile, OPEC and non-OPEC oil ministers will meet next week to discuss what they could do in the event of a war in Iraq, an official from the Organization of Petroleum Exporting Countries said.

OPEC countries have increased production in recent months in response to a strike in Venezuela and soaring oil prices.

According to a Dow Jones Newswires survey, OPEC crude output jumped by 1.43 million barrels a day to 27.091 million barrels a day in February from January.

www.chron.com March 4, 2003, 11:29PM By BILL HENSEL JR.

Continental Airlines is projecting its trans-Atlantic passenger traffic will fall by 15 percentage points this month, largely because of worries about a possible war with Iraq.

In a filing with the Securities and Exchange Commission, Continental also said that demand is weak throughout its system and it expects a poor showing in April.

"Trans-Atlantic bookings are looking weak in March, mainly due to concerns about a conflict with Iraq as well as the shift of Easter," Diane Dayhoff, Continental staff vice president for finance, wrote in a letter to the SEC on Tuesday. "We anticipate that our March trans-Atlantic load factor will be down about 15 points year over year."

A load factor is a calculation widely used by airlines to determine how full planes are.

April bookings "are currently showing some softness as well," Dayhoff wrote.

The figures included in the Houston-based carrier's regulatory filing are the first declarative projections from an airline about how it expects war with Iraq to impact passenger travel.

Continental, like most other major airlines, has been losing millions of dollars because of a sluggish economy, the aftermath of Sept. 11 and changes in business travel trends.

In addition to the impact of war jitters, the Easter holiday, which fell in March last year, has shifted to April. That will also cut into the March bottom line.

February's storms hurt Continental's operations in the Northeast and Midwest, according to Dayhoff. She said the company estimated those storms cost the company $10 million to $15 million before taxes.

Continental said in a report earlier this week that its load factor for February was 68.9 percent, 3.2 points below the load factor for February 2002.

Credit Suisse First Boston analyst Jim Higgins expressed disappointment with Continental's load factor for February. Credit Suisse had estimated a 2 percent increase in capacity for the airline.

The ongoing impact of the potential for war with Iraq on airline traffic coupled with the shift of the Easter holiday from March into April "suggests softer than usual trends," Higgins said in a report released Tuesday.

"We therefore expect downward revisons" to first-quarter earnings estimates, Higgins added.

Shares of Continental were down 22 cents Tuesday, winding up at $5.14 at the close of trading on the New York Stock Exchange.

Geopolitical events have led to higher fuel prices, Higgins noted, including jet fuel. The price of crude oil has risen 15 percent since the first of the year and is about 60 percent above last year, while jet fuel is up 75 percent, he said.

"The recent strength in crude prices will only exacerbate the airline's revenue softness," Higgins said.

The American Petroleum Institute's John Felmy attributed the crude oil price increase to a "perfect storm" situation of Venezuela shutting down production, very cold weather in the United States and nervousness over Iraq.

Felmy, the petroleum institute's chief economist, said while he could not speculate about what will happen with prices, he noted that winter will end soon and crude production already has begun to rebound in Venezuela.

"It is going to be how all of those factors come together that will affect crude prices, and that will in turn affect jet fuel prices," he said.

www.washingtonpost.com By Kenneth Bredemeier Washington Post Staff Writer Wednesday, March 5, 2003; Page E02

Virginia Attorney General Jerry W. Kilgore's office is investigating whether gasoline prices "are going up artificially or being driven by the market."

Kilgore said that in the past two weeks four lawyers and another staff member from his office have questioned producers and gas-station owners and listened to complaints from consumers about how the average price of a gallon of regular unleaded gasoline has risen in Virginia to $1.58 from $1. A gallon of regular now averages $1.68 nationally and in the Washington area.

"The price will go up with the trouble in the Middle East and Venezuela," Kilgore said. "But does it have to go up this quickly? I'm not sure the market is producing this big a jump."

Officials in Florida and California are conducting similar investigations.

The cost of crude oil typically accounts for about 40 percent of the retail price of gasoline, but lately, with the sharp increase in the price of crude because of the threat of a U.S. attack on Iraq and the lingering effects of a strike by oil workers in Venezuela, the proportion has been more than 52 percent.

Kilgore said that the investigation is being headed by Deputy Attorney General Judith W. Jagdmann and that his lawyers are looking at whether the major oil companies might be violating state antitrust law.

John C. Felmy, chief economist of the American Petroleum Institute, a trade group, said there is no mystery to the gas-price increase: It's simply that the price of crude oil has gone up so much. He said that for every dollar increase in the price of a barrel of crude oil, the pump price will increase 2.4 cents a gallon.

Exxon Mobil Corp. spokeswoman Prem Nair said that in addition to the crude-oil price increases, a colder-than-usual winter has increased the demand for heating oil, resulting in less gasoline being made.

Kilgore said his staff is also exploring why when a gas station raises its prices, others around it do the same.

Kilgore said he expects the investigation to reach some conclusions in about two weeks.

Tim Murtaugh, a spokesman for Kilgore, said the investigation was started after complaints from consumers and gas-station franchise owners who claim that the major oil companies impose rules that needlessly push gas prices higher, and that company-owned stations are favored.

Bruce B. Keeney Sr., executive vice president of the Virginia Gasoline Marketers Council, which represents about 1,000 of the 3,500 gas stations in the state, said the major oil companies' system of "zone pricing," in which retail gas prices in specific areas are kept more or less the same, is anti-competitive because the oil companies quickly change the wholesale price of gasoline if any station owner attempts to lower the pump price to meet competition from another dealer.

Felmy said it was "completely bogus" that normal pricing practices had anything to do with the recent gas-price increases.