sg.biz.yahoo.com Wednesday March 19, 1:58 AM By Mike Esterl Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Don't bet on oil prices crashing to earth or the U.S. economy surging anytime soon. Nibble at Latin American debt but steer clear of their stocks. And treat the foreign exchange market as a huge wild card.

That was the cautious assessment of Merrill Lynch in Tuesday's "War Trade" conference call on how to make money - and avoid losing it - in emerging market equities, bonds, foreign exchange and oil as the U.S. prepares to invade Iraq.

Mike Rothman, the investment bank's senior energy market strategist, warned clients that extremely low global oil inventories - about 130 million barrels below normal levels - will curb any plunge in crude prices even if war in the Middle East is a swift and tame affair.

Crude prices on the New York Mercantile Exchange dropped below $33/barrel Tuesday, down from a recent high of $39.99/barrel in February, after U.S. President George W. Bush late Monday gave Iraqi leader Saddam Hussein 48 hours to leave the country or face military action.

But Merrill Lynch is sticking to its 30-day target price range of $35.50-$46/barrel and a 60- to 90-day range of $27-$33/barrel - far higher than the sudden drop to $20/barrel in early 1991, immediately after a U.S.-led coalition began its first full-scale invasion of Iraq.

"There really is not fat comparable to what we saw 12 years ago," said Rothman, citing output shortages in Venezuela and the threat that Iraq will torch its own oil fields.

Higher oil prices are underpinning Merrill Lynch's forecast that the U.S. economy will grow an anemic 2% in 2003. That in turn could limit the upside of beaten-down emerging market equities - which have shed 7.6% in dollar terms so far this year according to Morgan Stanley's MSCI index - as companies scale back earnings forecasts amid weak consumer demand.

"Iraq is just the latest in a series of excuses why the global economic recovery has failed to materialize," said Ed Butchart, the bank's chief emerging market equities strategist.

Merrill Lynch is recommending a defensive posture in emerging market equities, preferring emerging Europe and Asia over Latin America, where economic growth has been weakest.

The firm has a neutral recommendation on Turkey, which neighbors Iraq and has been scrambling to decide whether to allow the U.S. to use its military bases. "The outlook is effectively almost changing on a day-to-day basis," said Butchart.

Merrill Lynch is more bullish on emerging market debt - but more cautious than most investors, who have plowed into the asset class in recent months, pushing the year-to-date return on the J.P. Morgan Emerging Markets Bond Index-Plus to 6.6%.

"We are neutral the market," said Tulio Vera, the bank's chief emerging market debt strategist, who cautioned that risk aversion could flare up again if the U.S. invasion of Iraq doesn't go smoothly.

Risk aversion levels in the emerging market bond market are currently at their lowest levels since early 2001, Vera added.

Merrill Lynch has overweight recommendations on the bonds of a handful of smaller Latin American countries, such as Colombia, Peru and Ecuador, where economic growth has been strongest and debt spreads still have room to tighten after regional solvency issues peaked last year. It's market weight on Brazil and Mexico, and underweight Venezuela and Turkey.

Yianos Kontopoulos, the bank's chief global foreign exchange strategist, is forecasting a period of great volatility and unpredictability in major currencies after the U.S. dollar rallied sharply Monday.

He said investors have been unwinding recent bearish positions on several currencies but that it's still too early to tell where they are headed in the near term.

"Basically we're still standing at a cusp and it's possible to move in both directions," said Kontopoulos.

But he cautioned investors from piling into the recent rally in the Mexican peso, which strengthened Monday at MXN10.77 to the dollar after sinking to a historic closing low of MXN11.22 on March 4.

"I think at levels of around MXN11, it's probably something that's consistent with at least the current macroeconomic picture," he said.

Some investment banks have been scaling back their growth forecasts for Mexico amid continued shakiness in the U.S. economy, which absorbs more than 80% of Mexican exports.

-By Mike Esterl, Dow Jones Newswires; 201-938-4026; mike.esterl@dowjones.com

edmonton.cbc.ca Web Posted : Mar 18 2003 12:34 PM CST

London - Crude oil prices staged their biggest one-day drop in more than a year Tuesday, as traders speculated that an Iraq war would be so short and decisive that Middle East supplies would not be severely disrupted.

In New York, April crude futures were down by $3.18 US to $31.75 US a barrel by early afternoon.

With war now a virtual certainty, traders are rushing to unwind positions ahead of a further price drop, once it's clear oil will keep flowing.

Saudi Arabia has moved to made good on earlier promises to ramp up production in the event of any supply shortages. And OPEC has already said it would not allow a supply shortage to develop.

The U.S. government has also signalled that it is prepared, if necessary, to release supplies from its 600-million barrel strategic oil reserve.

Oil topped out at $39.99 US a barrel in late February as war fears combined with a bitterly cold month and production problems in Venezuela to drain reserves.

www.vheadline.com Posted: Tuesday, March 18, 2003 By: Patrick J. O'Donoghue

Costa Rican Ambassador Ricardo Lizano has contradicted Venezuelan Confederation of Trade Unions (CTV) president Carlos Ortega’s lawyer, Omar Estacio. “Mr. Ortega has asked for territorial asylum in Costa Rica and my government is still studying the petition.”

Wrapping Ortega and the Venezuelan opposition over the knuckles, Lizano says he's the only person authorized to issue on behalf of Costa Rica.

Estacio had set the cat among the pigeons by announcing that his client has asked for political but not territorial asylum and that Ortega could be transferred to a third country.

The ploy has apparently backfired and Ortega has been asked to tone down and play by diplomatic rules since he is now a guest of the Costa Rican government.

allafrica.com Vanguard (Lagos) March 18, 2003 Posted to the web March 18, 2003 Hector Igbikiowubo

Amidst persisting supply hic-ups at filling stations across the country, the Petroleum Products Pricing and Regulatory Committee (PPPRC) has said that it does not anticipate any price increases in the near future, pointing out that prices of petroleum products cannot be set with a war situation.

Major marketers and the Nigerian National Petroleum Corporation (NNPC), have indicated that landing cost of premium motor spirit (PMS) popularly called fuel is now N34 per liter with NNPC attributing the high cost to the gulf crises as well as the crises in Venezuela.

The secretary of the PPPRC, Dr. Olawole Oluleye told Vanguard that petroleum products prices have exhibited an upward swing lately because of the fear of war between Iraq and the United States of America.

But she reiterated the committee's position on pricing saying that no immediate increase (s) was anticipated over the ongoing face - off between Iraq andUnited States.

On the recent report that major marketers are pushing for an increase in prices, she said that the major marketers are just one of the players in the sector and that they can not dictate to the committee.

According to Oluleye the federal government has a social responsibility to the people and would not sit idly and allow the people to suffer.

On the fundamentals that can lead to an increase in prices of petroleum products, she pointed out that they include the cost of crude oil, the exchange rate and cost of freight and insurance among others.

She however explained that since import prices of petroleum products and the local prices of petroleum products are at parity the major marketers cannot participate in the importation of petroleum products.

The communications manager of Unipetrol Nigeria PLC ,Tokumbo Durosaro while speaking with Vanguard reiterated the position of the major marketers saying that they cannot import petroleum products under the prevailing market situation .

It would be recalled that the managing director of the company, Adewale Tinubu, had while speaking on behalf of other marketers at a meeting with the NNPC canvassed this same position.

Other marketers who pleaded anonymity expressed similar sentiments, pointing out that landing cost of petroleum products in Lagos after cost freight and insurance have added up now to N34 per litre.

They maintained that at that rate it would be suicidal for any major marketer to import products under the prevailing price regime which has the price of pms pegged at N26 per litre.

It would be recalled that this was the reason why major marketers insisted at the meeting with the group managing director of the NNPC that they would rather have the corporation continue to import products and distribute to them.

Another industry operator who pleaded anonymity explained that it was wrong of the NNPC to try to demonize the major marketers by giving the impression that they have vowed not to import products.

The operator pointed out that since the NNPC gets allocated $450,000 barrels of crude oil per day at a cost of $18 per barrel, considering the prevailing market prices of crude oil , the corporation has no business complaining.

He also noted that the corporation has not been asked to account for the difference it was getting when Plat prices had not appreciated to the current level. He further pointed out that if the federal government really wants to create a level playing field, then it should also consider allocating crude oil to major marketers at $18 per barrel.

www.alertnet.org 18 Mar 2003 15:17

CARACAS, Venezuela, March 18 (Reuters) - Venezuelan police shot dead two suspected Colombian right-wing paramilitaries and captured three leftist rebels from the neighboring country in a sweep of part of the border area, a spokesman said on Tuesday.

The operation followed charges by Colombia's government that Venezuela's leftist president, Hugo Chavez, was not doing enough to guarantee security along their 1,400-mile (2,200-km) common frontier, where Colombian rebel and paramilitary groups are active.

A police spokesman in Venezuela's western border state of Tachira told Reuters the two men killed on Monday were believed to be members of the outlawed United Self-Defense Forces of Colombia (AUC).

They were part of a group of eight men traveling in a jeep who opened fire on a police patrol on a border road outside Urena near the Venezuelan frontier town of San Antonio.

In the ensuing gunfight, two of the group were killed and the rest fled over the border into Colombia.

The incident followed the capture in San Antonio on Sunday of three members of the Colombian leftist rebel group, the National Liberation Army. Known by its Spanish initials ELN, the group is one of several outlawed armies fighting in Colombia's drug-fueled guerrilla conflict.

The police spokesman said the capture was the result of a joint crackdown on both sides of the frontier at San Antonio by Venezuelan and Colombian police. "We're exchanging intelligence and information," he said.

Chavez has angrily denied repeated accusations by Colombia's government and military that Colombian leftist rebels are operating from bases inside Venezuelan territory. He and his army commanders have said they will repel any guerrillas found on Venezuela's side of the border.

Police said the three rebels captured were members of a faction of the Cuban-inspired ELN suspected of carrying out a bomb attack in the Colombian border town of Cucuta earlier this month that killed more than 10 people and wounded dozens.

The leader of the ELN faction, who goes under the alias "Commander Tyson," escaped the dragnet on Sunday and was still on the run on the Venezuelan side of the border.

Some 300 Tachira state police officers were taking part in the sweep of the San Antonio area launched last Thursday, the spokesman said.