www.thestar.com Mar. 18, 2003. 05:52 PM

NEW YORK (AP) — The price of oil plunged 9 per cent today, to its lowest level since early January, as traders bet the impending U.S.-led invasion of Iraq will go smoothly and that global stockpiles are sufficient to offset any supply disruptions.

The April futures contract fell $3.26 to $31.67 (U.S.) a barrel on the New York Mercantile Exchange, the lowest close since Jan. 8. The price of crude, which hit a 12-year high of $37.83 (U.S.) last Wednesday, has since fallen 16 per cent.

However, with U.S. supplies low and uncertainty in the Middle East high, traders said petroleum prices likely will remain volatile in the short term.

"This thing could go right back up," said Tom Bentz, an analyst at BNP Paribas in New York. "We're still vulnerable because inventories are tight."

The most recent data from the U.S. Energy Department showed commercial stockpiles of crude at 269.8 million barrels, 18 per cent below year-ago levels.

Supplies have dwindled as a result of high demand for heating oil in the northeastern United States, which has endured an especially cold winter, and fewer imports from Venezuela because of a prolonged nationwide strike.

Yet Bentz and other traders mostly expressed confidence today that the loss of Iraqi crude due to war could be made up elsewhere and that the U.S. government will tap its own 600 million barrel stockpile in an emergency.

European countries have their own stockpiles that could help make up for any supply shortages resulting from war, which is expected to begin as early as Wednesday night.

Furthermore, industry watchers said OPEC producers — with the exception of Iraq and Venezuela — are pumping over their quotas to take advantage of high prices. That extra supply could hit the market just as demand for gasoline, heating oil and other fuels drops to seasonal lows.

"There's quite a bit of oil in vessels and it's now beginning to hit the consuming areas," said Leo Drollas, chief economist of the London-based Centre for Global Energy Studies.

Saudi Arabia may have as much as 50 million barrels in storage or en route to markets, he said.

The United States consumes roughly 19.5 million barrels of crude a day and more than half of that is imported — much of it from neighbouring Canada and Mexico, as well as the Persian Gulf region and other areas of the world.

Fadel Gheit, senior oil analyst at Fahnestock & Co. in New York, said traders are coming to the conclusion that the world has enough oil to meet demand, even assuming that Iraq's daily production of two million barrels is taken out of the equation.

Venezuela, whose oil industry was all but shut down earlier in the year because of a nationwide strike, is now producing enough oil to make up for an Iraqi shortfall, Gheit said.

And Saudi Arabia has increased its production by one million barrels a day to more than nine million barrels a day, Gheit said.

"We have plenty of oil," he said. "This war premium has to come out of the price."

The biggest fear in the market is that oil facilities in other Middle Eastern countries, such as Iraq's neighbours Kuwait or Saudi Arabia, could be attacked — a scenario that would cause oil prices to shoot higher, Gheit said.

Short of that, he said prices could easily drop another $5 (U.S.) a barrel in the coming weeks.

Tuesday's decline in oil prices also drove down wholesale prices for gasoline and heating oil. Heating oil for April delivery fell 5.79 cents to close at 85.78 cents a barrel, while gasoline futures dropped 6.52 cents to close at 96.19 cents a gallon.

On London's International Petroleum Exchange, Brent crude from the North Sea closed at $27.75 (U.S.) per barrel, down $2.23.

usinfo.state.gov 8 March 2003

(U.S. pleased with participants' commitment to fight terrorism, drugs) (270)

At a March 12 regional security ministerial in Bogotá, the United States congratulated Colombia and its neighbors Ecuador, Peru, Brazil, Venezuela and Panama for their progress in strengthening the coordination of regional efforts against terrorism and narcotics trafficking, according to a statement issued March 18 by State Department spokesman Richard Boucher.

Boucher said that the United States is pleased that ministerial participants reaffirmed their commitment to the fight against terrorism and drug trafficking.

Following is the text of Boucher's statement:

(begin text)

U.S. DEPARTMENT OF STATE Office of the Spokesman March 18, 2003

STATEMENT BY RICHARD BOUCHER, SPOKESMAN

Regional Security Ministerial Held In Bogota, Colombia

The United States congratulates Colombia and its neighbors -- Ecuador, Peru, Brazil, Venezuela, and Panama -- for the progress made during the Regional Security Ministerial held in Bogota, Colombia, on March 12, 2003. We are pleased that the states that participated in this Ministerial have reaffirmed their commitment to the fight against terrorism and drug trafficking.

The document signed by the participants reiterates their support for United Nations Security Council Resolution 1373 and 1464, as well as Organization of American States Resolution 837, which calls on states to implement enhanced law enforcement measures and to promote a more law-abiding environment.

The document also calls on the participating states to meet periodically to discuss coordination and the implementation of the document. The cooperation agreed upon by the participating states will improve the security and quality of life of the people of Colombia, and of its neighbors.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)

story.news.yahoo.com Add Entertainment - Reuters/Variety TV to My Yahoo! By Sinead Carew

NEW YORK (Reuters) - DirecTV Latin America LLC said on Tuesday it filed for bankruptcy protection, as economic turmoil in Latin America forced the largest pay-television operator in the region to restructure its costs and debts.

DirecTV Latin America, which has been hammered by recessions and strife in Argentina, Venezuela and Brazil that have resulted in fewer subscribers, made the filing under Chapter 11 of U.S. Bankruptcy Code after it failed to renegotiate certain contracts to cut costs.

"We did so after concluding that our out-of-court restructuring negotiations were not going to result in an outcome that would allow us long-term viability," DirecTV's President and Chief Executive Larry Chapman told reporters in a telephone conference call.

The company said it would continue regular business throughout the restructuring process, which is expected to take between 6 months and 12 months.

The company, which is 75 percent owned by Hughes Electronics Corp., said the filing does not apply to Hughes or to DirecTV Latin America's operations in Latin America and the Caribbean. Latin American conglomerates Cisneros Group and Grupo Clarin are also stakeholders.

Hughes, which is owned by General Motors Corp., has agreed to provide $300 million in financing to allow the company to continue operating, while it navigates its way through bankruptcy proceedings.

The financing, called debtor-in-possession financing, is subject to bankruptcy court approval.

DirecTV Latin America also said Kevin McGrath, 49, has retired as chairman and named Larry Chapman president and chief operating officer, effective immediately.

DirecTV Latin America said it would ask the bankruptcy court to reject contracts that are "uneconomic and not in (the company's) best long-term interests," including a contract to broadcast the 2006 World Cup and a deal with Walt Disney to carry the Disney Channel Latin America.

Disney was not immediately available to comment.

DirecTV Latin America executives also said the company hopes to use the bankruptcy process to address Grupo Clarin's option to sell its 4 percent stake in the company in November for $196 million.

The company has also been negotiating with its largest lender Hughes, French set top box supplier Thomson Consumer Electronics and PanAmSat Corp., which is 81 percent owned by Hughes and music provider Music Choice.

Executives also said the company would enter discussions with other programmers whose contracts are set to expire during the bankruptcy procedure.

In the United States, Disney and Hughes are embroiled in a dispute over Disney's ABC Family Channel, with DirecTV threatening to drop the channel rather pay the 35 percent price increase that Disney is demanding.

DirecTV Latin America executives said the DirecTV discussions were unrelated to its own discussions.

The filing was made in the U.S. Bankruptcy Court in Wilmington, Delaware.

Hughes stock traded down 14 cents at $10.18 in afternoon trade on the New York Stock Exchange (news - web sites), while General Motor's stock was up 71 cents at $33.92. Disney's shares traded down 38 cents at $16.63. Additional reporting by Adam Pasick

www.news24.com 18/03/2003 22:58  - (SA)  

London - A recent sharp drop in oil prices ahead of a likely war with Iraq is based on shaky foundations, analysts said on Tuesday, warning that prices could rocket upwards again if the conflict drags on or oil facilities in the region are damaged.

The oil price in London has dropped by almost 10% since the start of the week, even falling below $27 per barrel briefly on Tuesday on the assumption of a short conflict.

The drop was precipitated by a series of announcements suggesting military action was imminent, prompting traders to start cashing in a "war premium" of between $2 and $6 a barrel factored in during recent diplomatic uncertainty.

But analysts said the plunge could be quickly reversed if the war does not follow US plans.

"If the war goes on for more than two or three weeks, then prices will shoot up again," said Manouchehr Takin, an expert with leading consultancy the Centre for Global Energy Studies (CGES).

While signs of a quick victory for US-led forces currently massed on Iraq's borders would trigger a further fall, this was not a foregone conclusion, he said.

"If the war drags on and on, placing a siege on Baghdad... that is really the scenario that could definitely cause the price to go up."

The price falls began on Monday afternoon when the White House announced that US President George W Bush was to address the nation that evening, following the end of diplomatic efforts to disarm Iraq without war.

Bush warned Iraqi leader Saddam Hussein that he and his family had 48 hours to leave the country for good or face invasion.

The oil price trajectory has been similar to that seen before the first Gulf War of 1991.

In October 1990, oil hit $41.15 per barrel - even more at today's prices - but the market slumped in January as a war to remove Iraqi forces from Kuwait grew nearer.

On the first day of US military action it plunged by almost seven dollars a barrel, eventually settling at $21.30.

However this time the size of any fall will be limited due to very different market conditions, said David Thomas, an analyst with Commerzbank.

"The fundamentals now are much stronger than they were 12 years ago. The possibility of a (price) collapse is going to be very much more muted than it was 12 years ago," he said.

The principal reason for this is the level of crude oil stocks, which were very high just before the 1991 conflict but are currently at a 27-year low in the United States after a strike in Venezuela crippled the country's oil exports.

And even if the market factors in a release of strategic oil reserves held by consumer nations and increased supplies arriving from producers, any dramatic news from the Gulf could have a massive impact, analysts said.

"Already there is this anti-American feeling all over the Middle East," said the CGES's Takin.

"There could be sabotage in the oil fields, in the export facilities of Saudi Arabia, Kuwait, the United Arab Emirates, and the oil flow would cease.

"These are the fears, because stocks are low," he said.

But for as long as the news remains positive for US and British forces, the price falls could well continue, said Orrin Middleton, an analyst with Barclays Capital.

"My guess is that it will keep going down for a while longer," he said.

www.wilmingtonstar.com Last changed: March 18. 2003 4:11PM By FABIOLA SANCHEZ Associated Press Writer

Former oil executive Juan Fernandez hugs his daughters Esther, 19, left, and Christina, 16, at the offices of the state oil monopoly, Petroleos de Venezuela S.A., after emerging from weeks of hiding in Caracas, Venezuela, Tuesday, March 18, 2003. Seven former oil executives emerged from hiding after a judge struck down warrants for their arrest on charges related to a two-month strike that sought President Hugo Chavez's ouster. The seven had been accused of interrupting and damaging the country's fuel supply.

Seven former oil executives emerged from weeks of hiding Tuesday after a judge struck down warrants for their arrest on charges stemming from a two-month strike that sought President Hugo Chavez's ouster. The executives hugged one another in front of the Caracas offices of the state oil monopoly, Petroleos de Venezuela S.A. Hundreds of supporters cheered and waved flags. "At moments like this words just don't come. I just want to say thanks," former executive Juan Fernandez said. "This decision gives us hope in the Venezuelan justice system. There are still judges willing to maintain their independence." The seven were accused of interrupting and damaging the country's fuel supply. They went into hiding for three weeks until an appeals court dropped the charge Monday. Prosecutors said they would appeal that ruling in the Supreme Court. The executives were among 15,000 oil workers - almost half the oil monopoly's work force - sacked for joining a walkout to demand Chavez's resignation or early elections. The strike, which fizzled last month, paralyzed the world's fifth-largest oil exporting industry and cost Venezuela $6 billion. The government says oil production has risen to 3 million barrels a day, almost what it was before the strike. But fired executives insisted Tuesday that production was 2.4 million barrels. Private economists expect Venezuela's economy to shrink 40 percent in the first three months of the year, after contracting 9 percent in 2002. Foes say Chavez is persecuting opponents, trampling the country's democratic institutions and fomenting class hatred. The former army paratrooper accuses opponents of trying to overthrow a democratically elected president and bring Venezuela back under the control of two corrupt traditional parties that ruled for 40 years until his 1998 election. Also Tuesday, strike leader Carlos Ortega waited for the Venezuelan government to grant him safe conduct to Costa Rica, where he has been given asylum. Venezuelan officials have indicated the government would do so. The head of Venezuela's largest labor union slipped into the Costa Rican Embassy on Friday, fleeing charges of treason, rebellion and instigation. The Costa Rican government granted Ortega territorial asylum Monday for what it said were "humanitarian reasons." Costa Rican Foreign Minister Roberto Tovar said the labor leader would be leaving for the Central American country soon. Costa Rican Ambassador Ricardo Lizano met Tuesday with Venezuelan Vice Foreign Minister Arevalo Mendez. "Costa Rica maintains cordial, respectful, institutional relations with President Hugo Chavez's government," Lizano said. He urged Ortega not to become "an instrument that perturbs relations between two countries that have diplomatic relations." Co-strike leader Carlos Fernandez, the president of Venezuela's biggest business association, is under house arrest awaiting trial for rebellion and instigation.