Tue June 10, 2003 01:16 PM ET NEW YORK (<a href=reuters.com>Reuters) - Oil prices held firm near 12-week highs on Tuesday, a day ahead of an OPEC producer cartel meeting that is expected to postpone fresh supply cuts.

In New York, U.S. light crude was unchanged at $31.45, after hitting $31.85 on Monday, the highest price since March and up nearly 30 percent from a year ago. In London, benchmark Brent crude oil was steady at $27.85.

OPEC ministers meeting in the Middle East emirate of Qatar on Wednesday are widely expected to leave production limits unchanged as delays in the resumption of Iraq's oil exports have kept global supply tight.

Kuwaiti Oil Minister Sheik Ahmad al-Fahd al-Sabah said on Tuesday he wanted OPEC to keep its current 25.4 million barrels per day (bpd) ceiling in place until it meets again in late September.

"From now to September, Iraq will still have a lot (to do) to reach the previous level of production ... we still have time to continue with our ceiling," the minister said.

After falling steadily from 12-year highs near $40 after Middle East oil facilities escaped the U.S.-led invasion of Iraq without much damage, prices have rebounded to levels over $30 per barrel, which can further undermine already weak economic growth.

The Organization of the Petroleum Exporting Countries, which controls around half the world's crude exports, aims to keep prices in a range of $22 to $28 a barrel for its basket of crude oils. The basket was last valued at $27.53.

"High crude oil prices make an imminent cut to OPEC quota levels unlikely at its meeting on Wednesday," said Barclays Capital Research in London in their daily report.

"Instead the group is likely to flag up further meetings in July/August in order to monitor and accommodate Iraqi output."

Iraq this month will sell its first crude since the U.S.-led invasion, tendering 10 million barrels of stored crude oil, allowing it to deliver an average of about 750,000 bpd during the second half of June.

Looting and sabotage at Iraqi oil facilities since the war will keep exports down to one million bpd in July, Iraq's de facto oil minister Thamir Ghadhban has said. Before the war, Iraq was producing about 2.5 million bpd and exporting 2.0 million bpd.

OPEC was also expected to press independent exporters such as Russia, Norway and Mexico to back any supply cuts needed later, OPEC President Abdullah al-Attiyah al-Attiyah said.

More indications on global oil supply and demand will be released on Wednesday when the U.S. government publishes its weekly petroleum inventory data, a key indicator in oil markets.

The figures are expected to show a small crude stock increase in the week ending last Friday, a Reuters poll of oil market analysts showed.

U.S. fuel inventories have failed to rebuild after supply disruptions from a strike in Venezuela and ethnic strife in Nigeria drew down stocks. U.S. crude stocks are 11 percent below last year, while gasoline is down 5 percent.

Reuters, 06.10.03, 12:33 PM ET NEW YORK, June 10 (Reuters) - NYMEX crude futures trimmed their losses midday Tuesday while prompt gasoline futures surged on cash market strength after two overnight refinery fires in Louisiana, traders said. But sentiment remained bearish amid talk within OPEC that the cartel would keep current output quotas unchanged through September, ahead of the group's meeting on Wednesday in Qatar. At 12:33 EST, NYMEX July crude was 3 cents weaker at $31.42 a barrel, after extending session highs to $31.40. It earlier dipped to a session low of $30.90. "There's a bit of short-covering going on after prompt crude extended the session highs," said a NYMEX floor trader. In London, IPE July crude contract was up 2 cents at $27.87 a barrel, also recouping earlier losses. Prompt gasoline futures regained their footing after giving up overnight gains, lifted by higher Gulf Coast cash gasoline market prices. NYMEX July gasoline was up 1.15 cents at 90.80 cents a gallon, just below its session peak of 91.00 cents. Arriving in Doha, Qatar, on Tuesday to attend OPEC's meeting on Wednesday, Venezuelan Energy and Mines Minister Rafael Ramirez said saw the oil market as balanced with supply good. [nDBT000659] A similar comment earlier came from Ali Rodriguez, head of Venezuela's state oil company PDVSA. "Right now the market is balanced, stocks are low especially in the U.S., and demand will rise in the next quarter so I'm not expecting any dramatic decisions," said Rodriguez. A proposal from Kuwait that OPEC should hold its output steady to September was "not a bad idea," said Nigeria's Presidential Advisor on Petroleum and Energy Rilwanu Lukman, a former OPEC president [nDBT000656]. Earlier, Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah said OPEC should hold output unchanged until its next scheduled meeting in late September [nL10504694]. UAE Petroleum and Mineral Resources Minister Obaid bin Saif al-Nasseri, meanwhile, said that OPEC needed to make sure it complied with production limits introduced at the beginning of this month [nL10644174]. In the U.S., Exxon Mobil Corp.'s (nyse: XOM - news - people) Chalmette, Louisiana, oil refinery had a fire very early Tuesday, but the company said that operations at the plant had returned to "normal" by Tuesday morning [nN10205313]. That was one of two fires within two miles and one hour in St. Bernard Parish, southeast of New Orleans. The other fire was at the Murphy Oil Corp. (nyse: MUR - news - people). plant in Meraux, which a spokesman said was extinguished by 5:15 a.m. EST [nN10256805]. Analysts views were mixed on U.S. government oil inventory data due out Wednesday morning, but the average of a Reuters poll of oil market analysts was for a 500,000 barrel stock increase as imports were expected to have dipped while refinery runs slowed a bit [nN09153458]. Gasoline supplies were expected to have risen by 1.4 million barrels and distillate were expected to have been boosted by 1.6 million barrels. NYMEX July heating oil futures were off 0.20 cent at 77.70 cents a gallon, paring earlier losses. It traded between 76.80 and 77.90 cents.

<a href=www.vheadline.com>Venezuela's Electronic news Posted: Tuesday, June 10, 2003 By: Kay Onefeather

Date: Tue, 10 Jun 2003 10:28:09 EDT From: Kay Onefeather Kaonefeather@aol.com To: Editor@VHeadline.com Subject: Senor Gomez

Dear Editor: Amnesty-Venezuela issues strong condemnation of Venezuelan government.

Senor Gomez, Amnesty International has done impressive work, in other parts of the world. However, I cannot seem to find your statements of condemnation against opposition (anti-government) forces in Venezuela.

Surely, you have issued such statements regarding:

• Deliberate sabotage, attempting to cripple the economy, and the entire country of Venezuela.
• Blatant threats against a residing President
• Manipulating media sources against a ruling government during a national lockout. (Isn't the lockout itself, illegal?)
• Continued attempts to undermine, and manipulate public opinion against their President, and their government.
• Decades of below-minimum wages paid to workers, which most assuredly has lead to continued poverty facing the country.
• Poverty, suffered by the majority of people in Venezuela for decades, but only NOW seems newsworthy.
• Lack of health care for the majority of people, again for decades, and again only NOW gaining media attention.

Of course, you condemn those forces the government must battle daily, while trying to improve conditions in Venezuela.

But, I would very much like to read your condemnation of those aforementioned acts and their perpetrators.

Could you direct me to THAT statement of condemnation?

Kay Onefeather kaonefeather@aol.com

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Tuesday, June 10, 2003 By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: As I was reading about the invasion of the Caracas headquarters of Petroleos de Venezuela by unemployed chavistas from eastern Venezuela, in furious demand of their share of the spoils, I was listening to the speech given by Roy Chaderton at the OAS meeting in Chile...

And I could not believe my ears.

In a very hesitant manner, reading from a text that seemed unknown to him up to that moment, Chaderton denounced the Venezuelan media as racist ... because they have no blacks in their TV programs or newspaper staffs.  Although this is partially true, since blacks are in clear minority in those organizations, Chaderton was getting into hot waters by saying this.

Why?  Because there are virtually no blacks in the staff of Chaderton's Foreign Ministry. And there are practically no blacks in the government TV station "Venezolana de Television."

The truth in all cases is that the mixture of racial shades in Venezuelan organizations reflect, very approximately, the percentages of those shades in the overall make up of our population. There is no conscious racial discrimination involved, although, again, there are distortions introduced by cultural and educational ingredients which are disappearing as time goes by.

The mere mentioning of this element by Chaderton as a sign of racism in the Venezuelan media is racist in itself. We have to remember that Chaderton spoke in hateful terms about the "blue-eyed and white" managers of PDVSA at the time of the April 11, 2002 events.

Racist expressions have been very rare in Venezuelan politics ... they have only been characteristic of the Chavez regime ... Chavez just said, a few days ago: "I am black and ugly but I am no communist."

The racial ingredient is ever-present in the speeches of the President, suggesting a strong inferiority complex ... this racial line of the President has been picked up by more cultured members of his staff, like Chaderton, except that it seems to be backfiring when used in international circles which know about the Venezuelan reality.

Venezuelan censa, since 1926, have never classified Venezuelans in terms of whites, 'mestizos' and/or blacks. A rough estimate indicates that mestizos make up some 70% of our population. They are of all shades, all coffee and milk, more coffee or more milk. Whites are about 20% of the total, while blacks, really blacks, make up no more than 10%.  Native indians are very few, some 1%. The fact that we are a 'mestizo' country has allowed for very permeable social boundaries, much more so than most other Latin American countries like Peru, Bolivia, Argentina or Paraguay. The limitations to this fluid ethnic situation have traditionally been derived from the historical colonial social structure, in which creoles owned the land and blacks were slaves. This has slowly evolved into a more homogeneous and tolerant social structure.

Racism against whites is also racism ... this is what Chaderton is doing as part of the political strategy of the government. He does not do this out of conviction, as he does not mix with blacks. In the Chavez cabinet, the only blacks are Maria Urbaneja and Aristobulo Isturiz.

In a very mediocre cabinet of over 20 persons they represent less than 10% of the total and, I must say, they are as mediocre as the white or 'mestizo' members. More than color, therefore, mediocrity is the dominant characteristic of the government team.

Perhaps worse than the racial issue brought up by Chaderton was the religious issue. In Venezuela 75% of the population is Catholic, about 20% Protestant and 5% belong to other denominations or to none. There are some "adepts" of Maria Lionza, the sorceress, as well as some enthusiastic followers of Voodoo ... some at the highest levels of the government. There is a beautiful Muslim mosque and a very influential Jewish community lives side by side with Muslims. The Constitution allows total freedom of religion and ecumenical events frequently take place in total harmony.

• This is the reality of the country that Chaderton has badly misrepresented in Chile, blasting Christians as "very dangerous" people ... as criminals like Hitler and Stalin.

The objective of these highly artificial charges was no other than to reiterate Venezuela's alignment with the Muslim world ... not so much in a religious sense but in a political sense. Chaderton's whole deplorable speech was designed to irritate the US further, to insult Secretary of State Colin Powell ... Powell, a Black Christian, listened in a dispassionate manner, but will certainly not forget.

When I referred to the Chavez government team as resembling a lunatic asylum I was not trying to be disrespectful, but factual. Our memory of Felipe Perez and his religious admonitions is still fresh. The person in charge of the currency blockade quotes the prophet Malachi at every possible moment.

Military strongman Baduel claims to have had 5 lives before this one ... on national TV hookup, Chavez describes the voodoo maneuvers being attempted against him ... Chaderton keeps an autistic countenance except when he is being racist ... Minister Cabello sings continuously the theme song of the revolution while Isturiz and Urbaneja dance the merengue. Anybody would have reasons to worry about this bunch.

One feels like Casey Stengel, when managing the original New York Mets ... he kept asking: "Does anybody here knows how to play this game?"

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email gustavo@vheadline.com

Our editorial statement reads: VHeadline.com Venezuela is a wholly independent e-publication promoting democracy in its fullest expression and the inalienable right of all Venezuelans to self-determination and the pursuit of sovereign independence without interference. We seek to shed light on nefarious practices and the corruption which for decades has strangled this South American nation's development and progress. Our declared editorial bias is pro-democracy and pro-Venezuela ... which some may wrongly interpret as anti-American. Roy S. Carson, Editor/Publisher Editor@VHeadline.com    © 2003 VHeadline.com All Rights Reserved.  Privacy Policy Website Design, hosting and administration by: Integradesign.ca 

By Myra P. Saefong, <a href=cbs.marketwatch.com>CBS.MarketWatch.com Last Update: 3:42 PM ET June 10, 2003

SAN FRANCISCO (CBS.MW) -- Crude futures closed higher Tuesday, with traders unwilling to sell ahead of an expected decision on production levels from OPEC members gathering in Qatar.

The cartel's summit in Doha, Qatar, is expected to announce a decision on Wednesday. The current quota stands at 25.4 million barrels per day, excluding Iraq.

"There still seems to be some genuine suspense over what OPEC might do at tomorrow's summit meeting and prices are fluctuating accordingly," Tim Evans, a senior analyst at IFR Pegasus in New York, said in an afternoon update.

But Evans said he remains confident that with prices at current levels, "OPEC is not just unlikely to cut output, but is also unlikely to schedule a meeting before the next summit on Sept. 24."

With uncertainty weighing heavily on the oil market, crude for July delivery closed at $31.73 a barrel, up 28 cents on the New York Mercantile Exchange. It traded as low as $30.90 earlier in the session and rose to a high at $31.85 on Monday -- a level not seen since before the U.S.-led war in Iraq.

Belief that OPEC won't cut quotas Wednesday is growing, Joshua Sadler, vice president at the energy-trading desk of Societe Generale told clients in a note Tuesday.

"The current prices, which are at the top of OPEC's desired price range, low stocks and continued uncertainty as to the exact date and volumes of Iraqi [oil] all point to OPEC taking a pass," he said.

Indonesia, Venezuela and the United Arab Emirates are reportedly among the OPEC countries that don't expect a quota cut. OPEC President Abdullah al-Attiyah has said that while members will have to watch the return of Iraqi exports, they won't necessarily need to cut production.

Kuwait said it'll push for a cut, and Algeria has said current supplies are exceeding demand.

Even with these conflicting comments from OPEC members, most analysts predict that the cartel will leave its production quota unchanged and continue to monitor Iraq's exports. Read the OPEC preview story.

Dow Jones reported that an oil minister from the United Arab Emirates said Monday that while OPEC will likely decide to keep its output ceiling steady, it needs to cut back on quota cheating.

Supply data due

A distant second on traders' list of concerns is Wednesday's weekly updates on U.S. petroleum inventories from the Energy Department and American Petroleum Institute.

Tim Evans, a senior analyst at IFR Pegasus, is looking for a 1 million to 3 million barrel rise in crude inventories for the week ended June 6. Societe Generale's Sadler expects a 500,000-barrel climb.

Gasoline and distillate inventories likely climbed between 2 million and 3 million barrels, Evans said. But Sadler's looking for a rise of 1.4 million barrels for gasoline stockpiles and a climb of 1.6 million for distillate inventories.

In the most recent report, the Energy Department said motor gasoline inventories rose 2.3 million barrels for the week ended May 30. Crude and distillate inventories also climbed that week. See full story.

Gasoline prices climb

In other Nymex trading, gasoline futures closed with a more than 2 percent gain as news of refinery problems sparked supply concerns.

July unleaded gasoline rose by 2.06 cents to close at 91.7 cents a gallon. July heating oil closed up by 0.84 cent at 78.74 cents a gallon.

Thorsten Fischer, an energy economist at Economy.com said gasoline found support from news of problems at a Tesoro (TSO: news, chart, profile) refinery in California and two fires in Louisiana, one in Chalmette at the Exxon Mobil (XOM: news, chart, profile) refinery and one at the Murphy Oil (MUR: news, chart, profile) refinery in Meraux.

Natural gas gets noticed

Elsewhere on the energy front, representatives from the natural gas industry as well as consumer groups and analysts addressed the natural-gas supply situation at a hearing before the House Committee for Energy and Commerce on Tuesday.

Federal Reserve Chairman Alan Greenspan told Congress that industrial users of natural gas are feeling the pinch of the structural natural gas shortage in North America. See full story.

Richard Sharples, a senior vice president at Anadarko Petroleum (APC: news, chart, profile), also warned that the U.S. faces a "serious challenge with the growing gap between natural-gas supply and demand." Read a related archived story.

With supply concerns in the backdrop, natural gas for July delivery rose by 1.6 cents to close at $6.33 per million British thermal units -- well off the session's low of $6.23.

An update on U.S. natural-gas supplies in storage is due Thursday morning. Early estimates call for a rise of 110 billion cubic feet, but analysts at Fimat USA expect a 98 billion cubic foot climb. A year ago supplies rose 88 billion cubic feet.

Last week, the Energy Department said gas supplies rose by 114 billion cubic feet for the week ended May 30. But total supplies of 1.199 trillion cubic feet in storage are still 755 billion cubic feet less than they were a year ago.

In the equity arena, oil-service shares traded narrowly higher, as reflected by activity in the Philadelphia Oil Service Index ($OSX: news, chart, profile). See Energy Stocks.

Elsewhere, Nymex gold futures closed at their lowest level in a month. See Metals Stocks.

The Reuters/CRB Index, a broad-based measure tracking commodity futures prices, rose by 0.4 percent to 237.7. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.