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By Kevin Morrison in London and agencies Published: March 19 2003 10:24 | Last Updated: March 19 2003 23:18

The slide in US oil prices accentuated on Wednesday, deepening the rapid fall in prices during the previous four sessions as traders braced themselves for more volatility in the days ahead with the US and UK on the verge of going to war with Iraq.

The key London IPE Brent crude futures contract for May delivery fell further, extending losses as US prices were weakened by fading concern over low commercial oil stockpiles. US oil imports rose in the latest week, according to official data.

"Oil inventories were higher and we can expect to see that trend continue as there is plenty of oil being shipped across the water to the US," said Kevin Norrish, head of commodities research at Barclays Capital.

The Nymex light sweet crude contract for April delivery settled $1.79 lower at $29.88 a barrel in New York. With the April contract ending on Thursday, more activity was seen in the May contract, which lost 70 cents to $29.35 a barrel.

In London, IPE Brent crude oil for May delivery lost 50 cents to $26.75. Despite talk that prices could fall to the lower end of the $22 to $29 per barrel range favoured by Opec, investors were pricing in more modest falls. The December Brent contract traded at $25.60 a barrel on Wednesday and December Nymex light sweet crude at $26.80.

In the latest US weekly inventory reports, both the US Energy Information Agency and the American Petroleum Institute, said crude stocks had risen, but gasoline inventories had fallen and were now heading towards relatively low levels ahead of the US driving season, the biggest consuming period of the year.

Gold sold off contracts as well with spot gold prices finishing at $335.50/$336.26 a troy ounce by the end of New York trading, down from $337.50/$338.25 late on Tuesday. London dealers fixed the afternoon reference price at $335.80.

Spot platinum fell as Japanese investors, who have been one of the major reasons for the white metal hitting a 23-year high recently at $707 an ounce, were selling with higher than average trading volume on Tocom.

A casualty of the falling oil price is rubber, which was pushed to five-year highs last month as rising prices for synthetic rubber, which is made using oil, pushed up natural rubber prices. The August futures contract on Tocom fell ¥1.9 a kilo to ¥128.1, down almost 7 per cent from its peak.

www.vheadline.com Posted: Wednesday, March 19, 2003 By: Robert Rudnicki

Coordinadora Democratica is calling for opposition supporters to hold a demonstration outside the Costa Rican embassy in Caracas to say farewell to Confederation of Trade Unions (CTV) president Carlos Ortega who is set to leave Venezuela seeking political asylum while an arrest warrant remains hanging over his head for his role in the two-month long work stoppage which brought much of Venezuela's economy to a virtual stand still until the strike ended on February 2.

The rally is set to commence at 10:00 a.m. just a few hours before Ortega flies to San Jose de Costa Rica and this follows an approval from the Costa Rican government granting Ortega political asylum after he claimed that he has been the victim of political persecution by President Hugo Chavez Frias and his government.

Ortega went on the run shortly after fellow strike leader Venezuelan Federation of Chambers of Commerce & Industry (Fedecamaras) Carlos Fernandez was arrested.

www.vheadline.com Posted: Wednesday, March 19, 2003 By: Robert Rudnicki

Venezuelan Executive Vice President Jose Vicente Rangel has held talks with Brazilian Foreign Minister Celso Amorim to discuss the political situation in Venezuela as part of a trip that will also take him to Argentina, Chile and Uruguay.

Rangel will now hold talks with his Brazilian counterpart Jose Alencar on the Friends of Venezuela group's role in the breaking the Venezuelan political deadlock, but the meeting Rangel had scheduled with Brazilian President Luiz Inacio Lula da Silva has been cancelled.

Rangel will then head to the other Latin American countries on his list to further spread the government's position on the current crisis.

This follows similar initiatives from opposition representatives who have also looked abroad to drum up support.

www.mirror.co.uk

THREE men were last night being quizzed after two home-made bombs were found at a flat near Gatwick airport.

The suspects, European nationals, had been arrested following a raid on the property above an engravers.

They were held under the Terrorism Act. Residents were evacuated as bomb disposal experts moved into the flat at Langley Green, just a mile from the West Sussex airport.

More than a dozen police officers were guarding the home early this morning.

The street it is in was cordoned off.

Inspector Geoff Sharnock of Sussex Police, said: "During a routine inquiry two viable improvised explosive devices were found. They are effectively home-made bombs. Three men have been arrested.

"One was held elsewhere and two were arrested at the flat.

"Bomb disposal experts have gone into the premises to make sure the devices were safe."

Detective Chief Inspector Tony O'Donnell added: "At this stage it's too early to speculate on the motive behind this incident.

"It has not been linked to any target or specific organisation."

Another officer said: "As a result of an incident in Langley Green three Europeans have been taken into custody under the Terrorism Act.

"Police are dealing with the matter in connection with other agencies."

The suspects were being questioned by police and immigration officers.

This is the latest in a series of arrests close to or at Britain's major airports.

Last month a man from Venezuela was accused of smuggling a live hand grenade through customs at Gatwick, which is now patrolled by armed police worried about terror attacks.

www.sfgate.com Sam Zuckerman, Chronicle Economics Writer Wednesday, March 19, 2003

Oil prices plunged around the world Tuesday as traders decided that a U.S. attack on Iraq will succeed quickly and cause little disruption of energy markets.

A day after President Bush issued an ultimatum to Iraqi leader Saddam Hussein, setting the stage for an immediate invasion, a wave of selling gripped the oil market. The price of contracts to deliver crude oil next month fell $3.26 to $31.67 a barrel on the New York Mercantile Exchange, a drop of nearly 10 percent.

Since last Wednesday, the cost of those contracts has fallen 16 percent, reversing much of the big run-up in oil prices that had occurred during the past year as Washington's showdown with Hussein approached.

If it lasts, the sharp drop in oil prices will be a real boon to consumers and help boost lagging economies around the world.

Unleaded gasoline in the Bay Area averaged a record $2.27 per gallon last week, up 71 cents from a year ago. Gas prices won't come down in lockstep with falling crude costs, but the decline will put downward pressure on prices at the pump.

Nationwide, money that's now going to fill tanks and pay heating-oil bills will be freed for spending on other items.

But analysts warned that there are reasons to question whether the drop in oil prices can be sustained. Oil-market participants are betting that U.S. forces will roll over the Iraqis in short order and that oil facilities will suffer little damage. Any deviation from that scenario could send oil prices shooting up.

"Traders are discounting the prospect that war will be a quagmire," said Severin Borenstein, director of the University of California Energy Institute. "They are missing the point of what a war premium really is -- a risk that war could go badly."

What's more, supplies are tight in the energy market even without a conflict, leaving little margin for error. Production by Venezuela, one of the world's leading exporters, has been crippled by internal political conflict. After a cold winter that produced heavy demand for heating oil, inventories of crude are down 18 percent from a year ago. Spare production capacity is significantly lower than it was at the time of the Gulf War 12 years ago.

"You would think oil markets would show more concern," said Merrill Lynch energy analyst Michael Rothman. "There is still significant upward risk in the price of oil."

Market participants are calculating that such producers as Saudi Arabia will make up for any war-related shortfall. In addition, the United States and other leading petroleum consumers may tap into strategic reserves, putting millions of additional barrels of oil on the market.

Much of the action on the oil market reflects the eagerness of traders to sell before war starts, analysts said. During the opening days of the Gulf War,

oil prices plunged by about a third when it became apparent that the United States and its allies were winning a quick victory.

The hard-pressed economies of the United States, Europe and Japan badly need lower energy prices.

Economists from Federal Reserve Chairman Alan Greenspan on down have cited geopolitical risk -- the danger of war -- as the main drag on the world economy now.

"When analysts talk about geopolitical risk, they divide it into two parts, " said Randy Moore, editor of the newsletter Blue Chip Economic Indicators. "One is the reluctance of businesses and consumers to spend and invest. The other is the effects on the economy of a rise in oil prices."

Partly because of those effects, economists have been cutting back their growth predictions for the U.S. economy. Early last year, forecasters polled by Blue Chip Economic Indicators predicted that the U.S. economy would grow 3. 2 percent in 2003. By this month, that forecast had been trimmed to 2.6 percent, with higher energy prices an important factor in the reduced expectations.

Chronicle news services contributed to this report. / E-mail Sam Zuckerman at szuckerman@sfchronicle.com.