Money April 1, 2003: 11:01 AM EST

Nation's biggest union calls off a 3-day strike set for Tuesday, raising hopes for normal output.

LONDON (Reuters) - World oil prices eased Tuesday after the cancellation of a general strike in Nigeria raised hopes that output closed by ethnic clashes in the West African OPEC member might soon return to normal.

At around 10:45 a.m. ET, light crude for May delivery shed 79 cents at $30.25 a barrel on the New York Mercantile Exchange.

In London, benchmark Brent oil fell 25 cents to $26.30 a barrel. Prices eased after Nigeria's biggest union called off a three-day strike originally scheduled to begin on Tuesday.

"News of the agreement on the Nigerian strike has given the market some breathing room," one London oil trader said.

While the 12th day of war Iraq and prevented a steeper price fall, dealers feared a strike would have further deepened the crisis in Nigeria, the world's eighth-largest oil exporter.

Tribal clashes have shut nearly 40 percent of Nigeria's 2.2 million barrels per day of crude production for more than a week. Oil producers Shell and ChevronTexaco have said they will not resume operations from Forcados and Escravos in the western Niger swamps until they can be sure of their staff's safety.

Nigerian and Iraqi jitters have helped support oil prices in recent days after the market lost a quarter of its value in the approach to the start of the war when dealers took the view that Baghdad would not resist for long.

War worries have been countered by world supplies sufficient to meet lower seasonal demand in the second quarter.

"What's driving prices right now is the offset between supply security fears, balanced against expectations of softer demand, which you normally get at this time of the year," said Kevin Norrish, energy analyst at Barclays Capital.

While the war has put a halt to Iraq's 1.8 million bpd of crude exports, the Organization of the Petroleum Exporting Countries has compensated with increased supplies, with U.S. ally Saudi Arabia in March hitting its highest production level in 21 years

"As far as the war is concerned, we have lost Iraqi supplies but clearly OPEC is still managing so far to make up for that," Barclay's Norrish said. Gasoline

Global energy demand on the 77 million bpd world market normally drops about two million bpd in the second quarter when warmer weather sets in the United States and Europe.

Demand then picks up again when gasoline consumption by motorists rises in the summer holidays.

Nigeria's high-quality crude, ideal for gasoline production, is missed because it is a popular feedstock among U.S. refiners.

Gasoline stocks in the United States are below year-ago levels as the world's biggest consumer of motor fuel gears up for peak demand. Click here to check CNN/Money's commodities page

"Looking at where U.S. gasoline inventories are and where prices are, lots will depend now on how soon Venezuela will get its gasoline production back to normal," Norrish said.

Venezuela, struggling to get production back on stream after a crippling opposition strike, said it will restart gasoline exports this week to the United States and expects all refining and exports to return to normal in four to six weeks.

The strike had contributed to extremely tight oil inventories in the West even before the war in Iraq.

Analysts polled by Reuters predict that U.S. data due Wednesday will show a large crude stock rise after a week of heavy imports.

By Myra P. Saefong, <a href=cbs.marketwatch.com>CBS.MarketWatch.com Last Update: 3:05 PM ET April 1, 2003

NEW YORK (CBS.MW) -- Expectations for a rise in last week's U.S. oil supplies, combined with reports that Nigeria has averted a strike by petroleum workers, pulled crude futures Tuesday beneath the $30-a-barrel level.

 Underscoring the market's volatility, crude for May delivery traded as low as $29.55 a barrel on the New York Mercantile Exchange. It closed down $1.26 at $29.78 a barrel -- its first close under $30 since March 26. The contract had closed the prior session above $31 a barrel for the first time since March 17.

The overnight high of $31.32 will likely be a short-term cap for the price of crude, said John Person, head financial analyst at Infinity Brokerage Services.

Commodities traders, to be sure, kept eyes trained on war-related developments out of Iraq as well. Notably, a strongly worded statement attributed to Saddam Hussein was read on Iraqi state television, but the Iraqi strongman failed to deliver the remarks himself. See story.

This fueled increasing speculation that Saddam is in hiding, is dead or has been mortally wounded, according to Person.

"Caution is warranted," Person said, following news that a three-day strike was averted in Nigeria, a major oil exporter. Nigeria's largest union called off plans for the walkout, which had been scheduled to start Tuesday.

However, these same factors that seem to pressuring oil prices -- the expectations for a rise in U.S. supplies as well as no strike in Nigeria -- "could prove chimerical with the next headline," Fimat USA analyst Michael Fitzpatrick warned clients Tuesday.

Indeed, ethnic violence continued in the Niger Delta and has spread to Nigeria's Port Harcourt area over the past several days. Production there is still down about 800,000 barrels from its daily pace of 2.2 million barrels because of the clashes, according to an Energy Department analysis.

Eyes on supplies

Meanwhile, market expectations are that there will be another large build in domestic oil stocks. The Energy Department and the American Petroleum Institute are scheduled to issue their weekly inventory reports early Wednesday.

Person expects the reports to show increases of 3.5 million to 4.8 million barrels in crude inventories for the week ended March 28. Tim Evans, a senior analyst at IFR Pegasus in New York is looking for increases of 2 million to 4 million barrels.

As for distillate supplies, Person's looking for a build of 2.3 million barrels, while Evans expects a drawdown of 1 million to 2 million barrels. Distillates include heating oil and jet fuel.

Gasoline inventories likely rose by 1.8 million barrels in the latest week, Person said, with Evans pegging a range of anywhere from a contraction of 1 million barrels to an expansion of 1 million barrels.

Crude supplies stood nearly 17 percent below where they were a year ago, the Energy Department said in its March 26 supply update. Gasoline inventories were 7.5 percent below the year-ago level, while distillate inventories were down by nearly 21 percent. See full story.

Also on Nymex, May heating oil closed at 74.09 cents a gallon, down 2.99 cents, while May natural gas closed at $5.125 per million British thermal units, up 6.5 cents, and May unleaded gasoline retreated 4.28 cents to 91.42 cents a gallon.

The average U.S. price for gasoline at the pump stood at $1.65 a gallon as of early Tuesday, compared with $1.656 on Monday, according to AAA's daily fuel gauge report. Prices have been on the decline since March 19.

In the Nymex metals pits, gold futures eased back on strength in the U.S. dollar. See Metals Stocks.

And in Tuesday's equity action, the Philadelphia Oil Service Index ($OSX: news, chart, profile) inched higher. See Energy Stocks.

The pullback in gold and crude weighed on the Reuters/CRB Index, a broad-based measure of the commodity futures market. The index stood at 230, down 0.6 percent. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.

More FUTURES MOVERS •War progress, supply rise push oil under $29 a barrel 2:55pm ET 04/02/03 •Crude ends above $31 on Iraq, Nigeria; corn rallies 3:42pm ET 03/31/03 •Oil prices gain $3 on the week 4:24pm ET 03/28/03 •Iraq, Nigeria obstacles pull crude back above $30 3:24pm ET 03/27/03 •Oil traders keep steady eye on Iraq; Nymex crude gains 3:29pm ET 03/26/03

Latest Industry News   Get Alerted on News in this Industry •Toronto stocks post solid advance 4:32pm ET 04/02/03 •Gold futures drop as much as $7 4:09pm ET 04/02/03 •War progress, supply rise push oil under $29 a barrel 2:55pm ET 04/02/03 •Reader comments 12:47pm ET 04/02/03 •Minor gains for Toronto 5:47pm ET 04/01/03

The Mercury News From correspondents in New York 01apr03

OIL prices gushed higher overnight, fuelled by fears of a bloody, drawn-out war in Iraq and fresh reports of unrest in major oil exporter Nigeria.

New York's benchmark light sweet crude contract for May delivery advanced 88 cents to $US31.04 a barrel.

The price of reference Brent North Sea crude oil for May delivery rose 81 cents to $US27.16 a barrel.

"The market is up on constant war talk. There is a pretty high level of concern," said AG Edwards market analyst Bill O'Grady.

But there had been no major attacks by Iraq on its neighbours, and no large terrorist attack, he added.

"It leads me to believe ... Gulf oil production is pretty safe right now," O'Grady said. "What the market is missing is that from the oil point of view there is really not a whole lot more risk."

The White House said it saw no evidence to date that the United States needed to tap its strategic petroleum reserve to offset supply disruptions stemming from the war against Iraq.

"There is no change in the status of the strategic petroleum reserve. It remains an issue that gets reviewed on a regular basis to determine whether or not a severe supply disruption has occurred," said spokesman Ari Fleischer.

"We have seen no evidence to date of a severe supply disruption, nevertheless the experts continue to monitor it," he told reporters.

Traders were trying to sift through the reams of war news to work out how the campaign in Iraq was really progressing, said GNI trader Robert Laughlin in London.

"The interest is very much . . . in terms of the propaganda machine over the weekend, as the Americans still say the war effort is being successful despite the fact there appears to be a mini-ceasefire," he said.

Ethnic unrest in Nigeria, which has reduced the country's oil exports by more than a third, was further fuelling concern, analysts said.

Political thugs attacked an opposition rally in Nigeria's troubled Niger Delta at the weekend, driving activists into a river and hacking them with machetes, an eye-witness said in Lagos.

Nigeria is due to go to the polls for general elections on April 12 and for presidential and state gubernatorial votes on April 19, the first test of the country's fragile democracy since the 1999 return of civil rule.

Over the past two weeks a violent uprising by ethnic Ijaw militants in the western Delta, south and west of the city of Warri, has led to scores of killings and crippled the region's oil industry.

"The market is up because people are still worried about the situation in Nigeria, where there was more violence over the weekend," said Deutsche Bank analyst Adam Sieminski in London.

"It means that the 800,000 barrels a day of production that was lost last week is still out, in contrast to statements on Friday and Saturday suggesting that a compromise between ethnic groups and the government had been reached," he added.

For the moment, there were few real concerns about supplies, but more bad news could send prices soaring, Sieminski said.

"There is still enough oil coming from Saudi Arabia and even Venezuela to keep the market supplied, but with Iraq out and the conflict in Nigeria still continuing, the market is tightly balanced, and if anything else should go on, we would see higher prices," he said.

<a href=asia.reuters.com>Reuters Tue April 1, 2003 06:37 AM ET By Sujata Rao

LONDON (Reuters) - World oil prices eased on Tuesday after the cancellation of a general strike in Nigeria raised hopes that output shut in the West African producer by ethnic clashes might soon return.

London benchmark Brent futures by 6:20 a.m. EST fell 55 cents to 26.73 a barrel and U.S. light crude dipped 83 cents to $30.21. Prices eased after Nigeria's biggest union called off a three-day strike originally scheduled to begin on Tuesday.

"News of the agreement on the Nigerian strike has given the market some breathing room," one London oil trader said.

While the war in Iraq and continuing ethnic unrest in Nigeria's oil producing regions prevented a steeper price fall, dealers feared a strike would further deepen the crisis in the world's eighth largest oil exporter.

Tribal clashes have shut nearly 40 percent of Nigeria's 2.2 million barrels per day of crude production for more than a week.

Nigerian and Iraqi jitters have helped support oil prices in recent days after the market lost a quarter of its value in the approach to the start of the war when dealers took the view that the war would not last long.

War worries have been countered by world supplies sufficient to meet lower seasonal demand in the second quarter.

"What's driving prices right now is the offset between supply security fears, balanced against expectations of softer demand, which you normally get at this time of the year," said Kevin Norrish, energy analyst at Barclays Capital.

While the war has put a halt to Iraq's 1.8 million bpd of crude exports, OPEC has compensated with increased supplies, with U.S. ally Saudi Arabia in March hitting its highest production level for 21 years

"As far as the war is concerned, we have lost Iraqi supplies but clearly OPEC is still managing so far to make up for that," Barclay's Norrish said.

Global energy demand on the 77 million bpd world market normally drops about two million bpd in the second quarter with warmer weather sets in the United States and Europe.

Demand then picks up again when gasoline consumption for motorists rises in the summer holidays.

Nigeria's high-quality sweet crude is being missed because it is a popular feedstock among U.S. refiners.

Gasline stocks in the United States, are running at a deficit to year-ago levels as the world's biggest consumer of motor fuel gears up for peak demand.

"Looking at where U.S. gasoline inventories are and where prices are, lots will depend now on how soon Venezuela will get its gasoline production back to normal," Norrish said.

Venezuela, struggling to get production back on stream after a crippling opposition strike has said it will restart gasoline exports this week to the United States and expects all refining and exports to return to normal in four to six weeks.

The strike had contributed to extremely tight oil inventories in the West even before the war in Iraq.

Analysts polled by Reuters predict that U.S. data due on Wednesday will show a large crude stock rise after a week of heavy imports.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Tuesday, April 01, 2003 By: Kay Onefeather

A Good President

1 - Leadership -- Refuses to bow to wishes of a 'select' few whose self-serving ideas are ... self-serving.

2 - Role Model -- Ability to inspire the People to stand up for their Rights against ALL odds!

3 - Honesty -- Tells it 'like it is' without empty, meaningless rhetoric.

4 - Spirit of Service -- Heroic Persistence in the face of Overwhelming Odds and Malicious Threats.

5 - Management Skills -- Ability to Stop greedy hands from Stealing Venezuela, one bulging bank account at a time.

6 - Helicopter Vision -- Watching the "vultures" circle, while sharpening the 'blades'.

7 - Life Record -- Exemplary life of survival, from dictators, and 'elements' bleeding the country of its life's blood.

EL PRESIDENTE!

Kay Onefeather Kaonefeather@aol.com