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LONDON, March 14 — OPEC powerhouse Saudi Arabia has snapped up 14 tankers to move 29.5 million barrels of crude oil to the U.S. Gulf for May delivery, brokers said on Friday.            THEY SAID THE bookings, to move 4.15 million tons, represent additional spot tanker bookings over and above normal demand and term contracts.        “It’s a huge volume, yes,” one shipping broker told Reuters.        The bookings made by Vela International Marine, state oil company Saudi Aramco’s chartering arm, indicate that its own large fleet is already fully employed.        Vela owns and operates one of the largest tanker fleets in the world, with 21 VLCC and ULCC-class tankers at its disposal.        Oil traders said the volume shows Riyadh will keep supplies running high into May after a sharp increase in recent months to fill shortages from OPEC producer Venezuela and allay supply disruption fears ahead of a possible second Gulf War.          World oil prices spiral downward

       Saudi Arabia has raised output by more than a million barrels per day (bpd) since the start of the year and is likely to average more than nine million bpd in March of its 10.5 million bpd capacity.        Brokers said 11 of the tankers booked to load between March 27 and April 18 had so far been confirmed. It takes between five and six weeks to reach the United States from the Gulf.        Some four other Very Large Crude Carriers representing some 1.12 million tons of crude, booked under oil tanker pool Tankers International, were on subjects and had still to be confirmed by the charterer, brokers said.        “This is the third consecutive month Vela has come in so strongly,” said Roy Mason of UK-based consultancy Oil Movements.        “It all fits with what we think we know about production changes,” he told Reuters.        Shipping brokers said the huge volume had undoubtedly helped freight rates from the Gulf balloon higher. Some routes are now trading at fresh two-year highs amid brisk business and a tightening tonnage list.        Freight for VLCC steaming from the Gulf to the U.S. rose 10 points from W120 to W130 brokers said.

By Myra P. Saefong, CBS.MarketWatch.com Last Update: 4:16 PM ET March 14, 2003

NEW YORK (CBS.MW) -- Crude-oil futures fell briefly under $34 to their lowest level in nearly five weeks Friday with President Bush appearing to lean more toward diplomacy than an immediate war with Iraq.

The Bush administration has also indicated a willingness to release oil from the nation's reserves.

"Oil is going down [and] oil will keep going down until a war occurs," said Michael Cavanaugh, an analyst at Peak Trading Group in Chicago.

Most of the rise in oil prices these past months have been an emotional rally based on the fear of a war, but now that the U.N. is "taking a stand, and pushing the U.S. war effort back, the oil market is trading lower, and will continue to do so until the U.S. makes its move," he said. Cavanaugh expects oil prices to drop to the low $30s "soon."

The start of a war will likely trigger a quick rally, he said, but "once the smoke clears, the oil will drop again."

On Friday, crude for April delivery on the New York Mercantile Exchange traded as low as $33.85 a barrel, a level not seen since Feb. 11.

It recovered a bit to close at $35.38 a barrel, down 63 cents with officials from the U.S., Britain and Spain set to meet Sunday in an attempt to salvage a war resolution that authorizes military force against Iraq to disarm. See Special Report: Countdown to War.

The meeting will likely "result in a final deadline and end the suspense on the disarmament issue with Iraq," said John Person, head financial analyst at Infinity Brokerage Services. "Either Saddam will give up or America will lead an assault by next week."

Chile proposed a new plan for the U.N. Friday that sets five disarmament conditions for Iraq to meet within three weeks, but doesn't include a trigger for war. The White House immediately rejected the proposal.

Negotiations for the surrender of some Iraqi military units were under way, CNN reported Thursday -- raising the notion that even if war does surface, it could be a quick win for the forces allied against Iraq.

With the notion that the U.S. intelligence agencies have possibly brokered a deal with top Iraqi military commanders, "odds now favor a quick decisive end to a military operation in Iraq, if that is the course of action that is taken," said Person.

As the Iraq-related news continues to flow, "every comment from New York, Washington and Baghdad will be deconstructed by traders looking to see if war is imminent, as it is now pretty much of a day-to-day threat," said Michael Lynch, president of Winchester, Mass.-based Strategic Energy & Economic Research (SEER).

In other news Friday, Bush delayed the release of his "road map" for Middle East peace until a credible prime minister is installed as a balance against Palestinian leader Yasser Arafat.

Supply side comments

Also pressuring oil prices were reports that U.S. Energy Secretary Spencer Abraham was more open to releasing oil from the Strategic Petroleum Reserve (SPR).

Abraham was quoted as saying the U.S. has a "unilateral right" to use the SPR, according to Phil Flynn, a senior analyst at Alaron Trading in Chicago. His reported comments indicated that more oil could be placed back into the market soon.

Reuters also reported that the Saudis have committed to 29.5 million barrels to the U.S. Gulf for May delivery.

Still, traders realized that even with the reports that Saudi Arabia was shipping "huge super cargos of oil to the U.S. ports, that will not relieve the immediate supply concerns for another 35 days or more," said Infinity's Person. And "until the supplies are here, anything could happen including a change of heart."

In Budapest Friday, Abraham said he remains confident that OPEC members will cover potential disruption to Iraqi crude supplies.

"I have all the confidence that they (OPEC) are sincere in their commitment," Abraham said according to Dow Jones. "If a severe supply reduction occurs... we have producers who have committed to come forward and step up production."

On Tuesday, OPEC decided to leave unchanged its members' aggregate production limit, excluding Iraq, at 24.5 million barrels. But some members, particularly OPEC heavyweight Saudi Arabia, have hinted broadly at a possible output hike in the event of war. See full story.

Also this week, the Energy Department and the American Petroleum Institute both reported sizable declines in the nation's weekly crude and gasoline inventories, along with mixed data on distillate supplies.

Crude inventories are now nearly 18 percent below the year-ago level, the government report, while gasoline stocks 7 percent below its year-ago level. See full story.

Retail gasoline prices continue higher

Prices for gasoline on the retail level continued to climb Friday, despite a second session of declines for the fuel's futures price.

The April gasoline contract fell by 1.73 cents to $1.0404 a gallon in recent action on Nymex.

But at the retail level, gasoline prices averaged $1.715 a gallon, up from $1.239 a year earlier and just short of the all-time high of $1.718 seen in May 2001, according to AAA's Daily Fuel Gauge Report.

In California, average price for regular gasoline was $2.142 -- the highest in the nation.

Heating oil cool off

Also on Nymex, heating-oil futures traded lower with forecasts calling for above-normal temperatures in the eastern half of the nation. Natural-gas prices, however, etched out a modest gain.

Heating oil traded well under $1 a gallon to hit a low at 91.7 cents a gallon, the lowest since Feb. 5. It closed at 94.07 cents a gallon, down 2.64 cents.

April natural gas rose 6.8 cents to close at $5.429 per million British thermal units after an intraday low at $5.08 -- the lowest since Jan. 29. On Thursday, it dropped nearly 9 percent.

"Inventories are very tight, but the heating season is almost over, said SEER's Lynch. "This makes the weather -- which is always uncertain -- of unusual importance."

Early Thursday, the Energy Department said natural-gas supplies fell by 117 billion cubic feet during the week ended March 7. Analysts at Fimat were looking for a decline of 143 billion cubic feet.

Total stocks of 721 billion cubic feet are 1.01 trillion cubic feet below the year-ago level and 655 billion cubic feet lower than the five-year average.

The Energy Department also reported Wednesday that distillates, which include heating oil, rose by 1.8 million barrels to stand at 98.3 million barrels. Despite the gain, this was still 23.6 percent below their year-ago level.

Meanwhile, gold for April delivery climbed 60 cents to close at $336.60 an ounce after losing nearly $11 a day earlier. See Metals Stocks.

In the equities arena, oil-services companies ended the session lower, with the Philadelphia Oil Service Index ($OSX: news, chart, profile) chalking up a loss of 0.4 percent. See Energy Stocks.

And the Reuters/CRB Index -- a broad-based measure of the commodity futures market -- closed at 240, down 0.1 percent, amid weakness in energy futures. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.

www.zwire.com SHAWN CLUBB, The Telegraph March 14, 2003

The Telegraph/JIM BOWLING Jeff Senger of Senger Gas prepares to detach a hose after filling a tank with propane gas in rural Jersey County. Propane gas has skyrocketed in cost in recent months, with the increases blamed on a severe winter across much of Propane customers might have noticed a sharp increase in prices lately, which industry insiders attribute to multiple factors, including the probable war with Iraq and a long, cold winter. Barb Bollinger of Senger Gas in Grafton said the cost for her company to buy propane from a distributor had risen 48 cents per gallon in one week. "It’s hard to pass this on," she said. "Everything has totally been going up, up, up." Bollinger said a minimum delivery could be 300 gallons, which would cost the residential customer an extra $150 with the increase in price. "It’s hard to stomach and pass on when you’ve got people out there, elderly people, that are trying to make it," she said. Melissa Erker, a spokeswoman for ConocoPhillips, a producer of propane, said the company does not comment about pricing issues because of the multiple factors that come into play. Phil Squair, vice president of regulatory and technical services for the National Propane Gas Association, said the price increase is tied to the long, cold winter, the threat of war in the Middle East and workers’ strife in Venezuela. "Propane is produced from crude oil and/or natural gas," he said. "When you’re refining crude oil, propane is the first thing to come up. When cracking natural gas, propane is the first (product). As prices of crude oil and natural gas change, propane prices track that change." Squair said the prices have not been affected in the exact same way in every region of the countrybut that they haven’t been much different. "It’s been a pretty bad winter across the country," he said. "When you have a higher demand and you have a long, cold winter, and you have troubles overseas, all the winter heating fuels are seeing the same things as to price increases." Squair said the prices could drop a bit once the demand eases off. "I know the weather services are reporting average sustained temperature rises," he said. "A decline in use would, I think, cause prices to ease off. The price of propane is not a regulated thing. To the extent demand starts to dwindle, we’re going to see prices dropping. "I’m sure individual propane marketers are conscious of the prices they have to pass on to their customers," Squair said. "No one wants to keep going back to their customers with price increases." shawn_clubb@hotmail.com

www.nationalpost.com Sherry Cooper Financial Post Friday, March 14, 2003

Does anyone really believe that the weapons inspections in Iraq are working and that the United States has already won, as Mr. Chrétien suggested last weekend? While we can reasonably debate the necessity of going to war, it is difficult to argue that Iraq is in compliance with Resolution 1441, requiring full and unconditional disarmament. The United States and the U.K. cannot indefinitely keep a 200,000-plus armed force on the doorstep of Iraq. And without that force, the weapons inspectors would be rendered impotent. As the diplomatic dance continues, the global economy has already paid an enormous price, and that price is now rising rapidly.

For more than a decade, the United States has provided the growth engine for the rest of the world. That engine is now clearly sputtering. While the American economy appeared to be reviving last summer, the resuscitation was cut short by the surge in energy prices and the shocks to business and consumer confidence. The rise in energy prices -- oil, natural gas, heating oil and gasoline -- has imposed a heavy tax on both households and businesses. Those who have recently paid a heating bill or filled up a gas tank know that discretionary income is down sharply. More than the fear of Middle East oil disruption has contributed to the surge in prices. It has been exacerbated by the unusually frigid winter weather. A strike in Venezuela, the fifth largest exporter of oil, has hobbled output. Refiners in the United States, the largest consuming nation, have whittled inventories to record lows in an effort to cut costs, and the shutdown of nuclear power plants in Japan has triggered large imports of extra oil for electricity there. Compound this with reduced conservation efforts, as Americans and Canadians have fallen in love with gas-guzzling SUVs, and you see why oil prices have risen so sharply and are unlikely to fall to the low-$20s even after the war.

The household sector is not the only casualty in the energy-price surge. The airline industry, already on its last legs, is further battered by the rise in costs. Many, including Air Canada, Northwest, United, US Airways, Air France and Lufthansa, are adding fuel surcharges to airfares, further eroding consumer purchasing power. The automobile industry, long a stalwart for the recovering economy in the United States and the booming economy in Canada, attributes much of its recent U.S. sales decline to consumer worries about war and higher gasoline prices. Production cuts in that sector are now threatening the strength of Ontario's economy.

And sentiment shocks are also doing meaningful damage. U.S. consumer and business confidence have been falling for months, and the latest survey data, released this week, suggest that Canadians are also feeling less optimistic about their economic futures -- not surprising, given the geopolitical purgatory we are enduring. The "CNN effect" has already set in. Consumers are glued to their TV sets and Internet screens, rather than out shopping, eating, drinking and cavorting. Businesses have postponed investment and hiring decisions, especially in the United States, and many remain fearful of terrorist reprisals as the United States appears to be increasingly isolated and mistrusted.

The U.S. economy deteriorated sharply in February, capped by the ghastly employment report. While the Canadian economy created more than 55,000 jobs last month, the United States lost 308,000. The February plunge in the U.S. employment figures might have been exaggerated by the January bounce, the call-up of military reserves and the East Coast blizzard, but these factors cannot fully explain the extraordinary weakness. It reflects employers that continue to retrench across the board. And the further elevation in the weekly unemployment insurance claims in the United States suggests scant improvement in March.

As a result, stocks have sold off sharply and interest rates have fallen as the safe-haven flight to government bonds continues. U.S. two-year yields have fallen below 1.4%, their lowest level in history. Ten-year Treasury yields touched 3.5% this week, their lowest reading since 1958. Some have speculated that the Federal Reserve will cut the overnight rate from an already depressed level of 1.25% when it meets next Tuesday. In my mind, this is unlikely in that it would do more to arouse concern than to assuage it, especially in the midst of the Security Council countdown. More likely, the Fed will shift its assessment of the economic outlook from neutrality to weakness, preparing us for a rate cut this spring. But we have already seen 12 rate cuts and U.S. mortgage rates are at record lows. It's hard to imagine that the Fed's actions this time would turn the tide.

Instead, what is needed now is a resolution of the Iraqi situation. It appears, in my mind, that barring a miraculous exit of Saddam Hussein, the cost to global security of not going to war may at this point be greater than the cost of doing so. After all the sabre rattling, the United States and Britain cannot blink now without emboldening not only Saddam Hussein, but also Kim Jong-il, the leaders of Iran, and any other dictators. Unfortunately, it appears that the turbulence in the post-Sept. 11 world is far more costly for the United States than anything we saw during the Cold War. The expenses and dangers of being the world's only superpower will continue to be far greater than imagined. A world so dependent on the strength of U.S. demand for imported products will be badly shaken by weakened American purchasing power. The fall in the U.S. dollar -- the rise in the Canadian dollar, the euro and the yen -- is reflective of this. Prolonging the current geopolitical uncertainty will only increase the price we all pay.

Sherry Cooper is global economic strategist and executive vice-president, BMO Financial Group.

www.sunspot.net By Dan Thanh Dang Sun Staff Originally published March 14, 2003

Forget Iraq. Forget the economy. Never mind all the reasons why. So far as motorists in Columbia were concerned, paying $2.02 per gallon for premium gasoline is highway robbery.

So they didn't. Most of them bought regular gasoline at $1.79 per gallon - which still was 8 cents higher than the national average and about 12 cents higher than the average at Baltimore stations.

It's not as if they had a choice, many of them groused. Walking isn't an option.

"We are definitely getting gouged," said Kathy McKinley, 43, principal at Bonnie Branch Middle School in Ellicott City. On a lunch break yesterday at the Mobil station by Long Gate Shopping Center, she shelled out $26 for less than 13 gallons of premium blend. "It's probably going to get worse."

While there's no evidence of price manipulation to feed conspiracy theories, fuel experts warn that the frustration will probably get worse, as pump prices are expected to continue rising.

In its weekly report on retail gasoline prices, the U.S. Department of Energy said Monday that the nationwide average price for a gallon of regular unleaded gasoline rose to a 21-month high of $1.712 a gallon.

Compared with a month ago, the cost of a gallon has jumped 4 cents in Baltimore and 10 cents nationwide. Compare that with the $1.22 average a year ago and prices are 48 cents higher, according to the American Automobile Association's daily fuel gauge report.

California pump prices for gasoline are the highest in the country, reaching $2.127 a gallon for regular-grade fuel this week, AAA reported. Prices in San Francisco reached a record $2.251 for regular yesterday.

"I was in a conference with oil experts this week, and I didn't hear anyone predicting that prices were going to drop anytime soon," said Deborah DeYoung, a spokeswoman at AAA MidAtlantic. "We're going to be breaking records we've kept since 1974 pretty soon. We haven't seen prices this high since the gas crisis of the '70s.

"It will add about $500 more for gasoline this year for the average driver, or about $42 more a month," DeYoung said. "It's not pretty."

No one needs to tell that to Debi Harvey.

While driving to a swim meet in Joppatowne with her two sons a couple weeks ago, the 48-year-old Mary Kay cosmetics saleswoman had to fill up her Ford Escort wagon at an Exxon station near Mountain Road.

"When we got to the gas station, the price was $1.679 a gallon," said Harvey, who fills up twice a week to see clients in Pennsylvania and on the Eastern Shore. "Five hours later, after the swim competition, it was $1.739. It's scary that in five hours, they raised it 6 cents a gallon."

"I am absolutely getting gouged," she added. Experts say the higher prices are not the result of gouging, it is a confluence of negative factors - a lot of bad things happening all at once.

Even though the strike in Venezuela has been resolved, production levels there are still down. There were recent concerns about a potential Nigerian oil strike. A much colder winter in much of the Northern Hemisphere forced refiners to make more heating oil instead of gasoline to keep pace with rising demand. And continuing fears about war in Iraq will keep influencing prices, said John C. Felmy, chief economist for the American Petroleum Institute.

"It's the perfect storm in the world energy markets," Felmy said. "The second quarter typically has lower demand because temperatures are warming up and it's right before the driving season, so that could reduce pressure on the markets. But the question of Iraq is a complete wildcard. The final unknown is the economy. Prices could go either way.

"One can't really tell at this point."

Marylanders might also brace themselves for a possible gas tax increase. With a crushing deficit to deal with and a need to balance the budget, Gov. Robert L. Ehrlich Jr. and the General Assembly haven't ruled it out.

Kevin Van Workman supports that idea, even though he is spending $150 a month to drive back and forth between Columbia and Gaithersburg to work at the National Institute of Standards and Technology.

"I know I'm not supposed to say it, but I've always been a proponent for raising gas taxes to cut down driving," the 28-year-old chemical engineer said.

As for why gas in Columbia is more expensive than in areas such as Towson, where regular gasoline is 11 cents cheaper, station owners say higher rent in their area and fuel increases dictated by corporate parents dictate pump prices.

Barbara Stigler, manager of Long Gate Mobil, wants people to remember that the price increases are not her fault. She knows her prices are higher than others, and she can hear the groans when the price board goes higher.

"Whenever we have to change the prices on the board, I try to make the owner go outside and do it," Stigler said. "You know, just in case he's got to dodge bullets or something."