www.dailytelegraph.news.com.au From correspondents in New York 07mar03

OIL prices swung to as war fears escalated ahead of a news conference by President George W. Bush and on the eve of a UN weapons inspectors' report.

"People are concerned about the Bush press conference, it might signal that war is a close," said Refco market analyst Marshall Steeves.

New York's benchmark light sweet crude for April delivery rose 31 cents to $US37 a barrel.

In London, the price of benchmark Brent North Sea crude oil for April delivery advanced 51 cents a barrel to $US33.51.

Traders viewed last week's $US39.99-a-barrel peak on the New York contract as a new ceiling, said Fimat analyst Mike Fitzpatrick.

They "can use the recent high as some kind of psychological resistance until situation with Iraq is clarified," Fitzpatrick said.

President Bush said the UN Security Council was in the final stages of deciding whether to back a war against Iraq and accused Saddam Hussein of making a "willful charade" of disarmament.

"We are days away from resolving this issue at the Security Council," Bush told a press conference at the White House, adding that he would press for a vote soon on a new resolution on Iraq.

It was "the final stages of diplomacy," he declared, highlighting how more than 200,000 US troops are now in place around Iraq ready for a war.

But with many observers saying that the US appeared determined to start a war, Bush said that "diplomacy has not worked, we have tried diplomacy for 12 years."

Traders were waiting nervously for a report on Friday from chief UN arms inspector Hans Blix to the Council, and, perhaps more importantly, the reaction of council members to his findings.

Mr Bush said the US will call for a vote on a new resolution submitted by the US, Britain and Spain whatever the level of support in the Security Council. France, Russia and China, which are also permanent members of the Council, are leading a coalition against the resolution.

"Yes, we will call for a vote, no matter what the whip count is," Mr Bush told the news conference.

"We are calling for the vote, we want to see people stand up and say what their opinion is about Saddam Hussein and the utility of the United Nations Security Council."

Barclays Capital analyst Orrin Middleton in London said prices would be supported at "these high levels" so long as uncertainty over the Iraq crisis persisted.

"The general trend is still 'to buy on dips'," Middleton said.

The low level of US oil stocks also buttressed prices, he said.

A cold snap in the United States and a strike in Venezuela that crippled the South American country's oil exports drained US inventories to low levels.

Analysts warned the oil market was exposed to demand or supply side shocks.

US Energy Secretary Spencer Abraham said in Brussels he expected to meet OPEC ministers in Vienna next week but played down the prospect of an oil crisis linked to Iraq.

Abraham is due to visit Vienna on Tuesday and Wednesday for a conference on tackling "dirty bombs" – such as radiological devices – organised by the International Atomic Energy Agency.

The Organisation of Petroleum Exporting Countries will also be convening at its headquarters in Vienna on Tuesday.

"I won't be attending those (OPEC) meetings but I'm sure I will have a chance to talk to one or more of the OPEC ministers," Abraham said after signing an agreement bolstering US-EU cooperation on research into clean energy and alternative fuels.

www.voanews.com VOA News 07 Mar 2003, 01:33 UTC

Venezuelan President Hugo Chavez has lifted the emergency status on crude oil and most petroleum exports, telling customers the state-run oil company will be able to fulfill its contracts.

Mr. Chavez made the announcement Thursday during a swearing-in ceremony for Petroleos de Venezuela's new board of directors.

Company officials declared in December that it was impossible to live up to its oil export contracts because of the two-month general strike that crippled the industry and brought Venezuela to a standstill.

President Chavez says output, which fell to less than 150,000 barrels a day during the strike, is now up to more than 2.6 million barrels a day. It was more than three million a day before the strike.

But oil workers who were fired because of their participation in the walkout said earlier this week that production is only about one million barrels a day.

Venezuelan's opposition called the general strike in December in a failed bid to force President Chavez to resign. They say his economic policies are destroying the country.

www.channelnewsasia.com First created : 07 March 2003 0937 hrs (SST) 0137 hrs (GMT) Last modified : 07 March 2003 0937 hrs (SST) 0137 hrs (GMT)

Oil prices swung higher on Thursday as war fears escalated ahead of a news conference by President George W Bush and on the eve of a UN weapons inspectors' report.

In New York, the benchmark light sweet crude for April delivery rose 31 cents to US$37.00 a barrel.Advertisement In London, the price of benchmark Brent North Sea crude oil for April delivery advanced 51 cents a barrel to US$33.51.

Analysts said the market is viewing last week's US$39.99-a-barrel peak on the New York contract as a new ceiling.

On Thursday, President Bush was to field questions in the White House's ornate East Room for just the second time since he took office, officials said.

The US leader hoped to lend momentum to efforts to secure the elusive nine votes needed to win passage by the UN Security Council of a new Iraq resolution paving the way for war while averting a veto by Russia, France, or China.

Traders were also waiting nervously for a report on Friday from chief UN arms inspector Hans Blix to the Council, and, perhaps more importantly, the reaction of council members to his findings.

A cold snap in the US and a strike in Venezuela that crippled the South American country's oil exports have drained US inventories to low levels.

Analysts warned the oil market was exposed to demand or supply side shocks.

US Energy Secretary Spencer Abraham said in Brussels he expected to meet OPEC ministers in Vienna next week but played down the prospect of an oil crisis linked to Iraq.

www.globeandmail.com Canadian Press

Montreal — Air travellers, already swamped by various extra fees, got more bad news Thursday when Air Canada announced plans to add another $10 fuel charge on each one-way domestic flight.

The move, which takes effect next Tuesday, will bring the fuel surcharge to $25, or $50 for a return trip.

One-way flights under 480 kilometres are exempt from the latest increase, said Air Canada spokeswoman Renee Smith-Valade.

"We're certainly cognizant that there's already a significant negative impact from fees and charges on the short-haul markets."

The latest hike is a temporary measure, Air Canada said.

The airline first introduced the fuel surcharge in 2000 at $15. It was cut in half in November 2001, only to go back to $15 in April 2002.

Air Canada said near-record oil and jet-fuel costs caused by geopolitical uncertainties over a war in Iraq and the strike in Venezuela were to blame for the latest surcharge.

"It's unfortunate that we have no option but to raise the fuel surcharge, although the impact of near record-high fuel prices is something all consumers can relate to," Ms. Smith-Valade said.

The airline says about 45 per cent of its fuel purchases are hedged against market increases in the current first quarter, and about 10 per cent for the three subsequent quarters.

Air Canada estimates that a $1 (U.S.) a barrel increase in the price of crude oil increases the airline's annual fuel costs by $30-million. Fuel is the second-largest expense for an airline, after personnel.

Canada's dominant airline is trying to negotiate cost-cutting measures with its unions after losing $428-million in 2002.

www.quicken.com Thursday, March 6, 2003 02:47 PM ET  Printer-friendly version   NEW YORK -- The U.S. Department of Energy's Energy Information Administration on Thursday cut its forecast for growth in U.S. oil demand by 15% to 500,000 barrels a day.

U.S. demand will grow this year by 90,000 barrels a day less than the EIA forecast last month. The drop came as the energy statistics agency cut its outlook for 2003 U.S. oil demand by 110,000 barrels, to 20.18 million barrels a day.

Some of the drop in the forecast for U.S. demand is accounted for by expectations that gasoline demand in the first quarter -- when weather has been poor and pump prices have spiked -- will be lower than originally thought. The EIA cut its forecast for first-quarter U.S. gasoline demand by 160,000 barrels, or 1.8%, to 8.58 million barrels daily.

A colder than normal winter in the U.S., particularly in the Northeast, has dragged on longer than expected and produced very strong demand for heating oil. The EIA raised its forecast for first-quarter demand for heating oil by 100,000 barrels to 4.29 million barrels a day.

The EIA expects broad growth in U.S. oil demand over the next two years, driven by an economic recovery and an increasingly tight natural gas market that will prompt consumers to switch fuels if possible.

The EIA expects growth in demand for all major petroleum products in 2003, in contrast to 2002, when gasoline demand was the one bright spot.

Demand for gasoline is expected to grow by 2.5% in 2003 and 2004, even as the strong increase in pump prices eats into drivers' disposable income. Demand for jet fuel is seen growing by 2.9% a year.

The EIA expects worldwide oil demand to grow by 1.1 million barrels a day this year, 100,000 barrels less than it expected last month. Demand for 2003 is forecast at 77.4 million barrels daily, 200,000 barrels less than expected in the last forecast.

Growth in demand, along with the ongoing disruption of supply from Venezuela and a looming war in Iraq, is expected to eat further into already depleted U.S. commercial oil inventories.

The EIA expects U.S. inventories of gasoline to end the second quarter at 202 million barrels, 10 million barrels less than it forecast last month, indicating it expects refiners to have trouble bulking up supplies ahead of the summer driving season. The agency expects gasoline inventories to end the first quarter at 198 million barrels, which implies a drop of eight million barrels from current levels during March.

The agency expects inventories of distillates, which include heating oil and diesel fuel, to end the first quarter at just 87 million barrels -- a figure that implies a drop of 9.5 million barrels in March. Last month, the EIA expected there would be 92 million barrels of distillates in inventory at the end of the first quarter.

The EIA also cut its expectations for growth in U.S. stocks of crude oil. Even if the situations in Venezuela and Iraq are resolved without further disruptions of supply, the industry will have trouble simultaneously rebuilding inventories of petroleum products and the crude oil from which they're made, the EIA said.

U.S. crude oil inventories will end the first quarter at 282 million barrels, down two million barrels from the last forecast, the EIA said. That figure implies 8.4 million barrels will be added to crude stocks this month.

The EIA cut its expectations for crude inventories at the end of the second quarter more sharply -- by eight million barrels, to 277 million barrels, a figure that implies growth of just 3.4 million barrels from current levels.

The agency expects the U.S. will end the year with just 278 million barrels of crude oil in stock -- barely more that what the agency considers the "lower operational level" needed to insulate the refinery system from supply shocks.

-Andrew Dowell, Dow Jones Newswires; 201-938-4430