<a href=www.vheadline.com>Venezuela's Electronic news Posted: Tuesday, June 10, 2003 By: Patrick J. O'Donoghue

Primero Justicia (PJ)  National Assembly deputy Gerardo Blyde dismisses President Chavez Frias' threat to sue opposition deputies for alleged disruption of parliament as ridiculous. "There is a political objective behind the threats made by the President last Sunday." 

Supreme Tribunal of Justice (TSJ)The constitutional lawyer brands such an action "absurd" and calls the President's bluff saying the move is just a smokescreen to divert attention from what is really happening, namely the dismantling of Venezuela's parliamentary institution by attempting to change the rules of the game which should be clear and "complied with from Assembly president to the least of the deputies." 

Blyde accuses AN president, Francisco Ameliach of violating current AN regulation and insists that it is up to the Supreme Tribunal of Justice (TSJ)  to issue a ruling on the validity of the parliamentary session held outside the Capitolio in El Calvario last Friday during which the majority government bench passed a partial reform bill on the internal debate regulation.

SAO PAULO, Brazil, June 10 (UPI) -- Brazil's President said Tuesday he will visit the Middle East later this year and defended the creation of a Palestinian state.

The exact date for the president's trip was not given, though Brazilian Foreign Minister Celso Amorim is scheduled to head to the region later this month.

The announcement by President Luiz Inacio Lula da Silva comes on the same day the Lebanese prime minister -- in Brazil on an official visit -- endorsed Brazil's appointment to the U.N. Security Council as a permanent member.

Several of Brazil's neighbors have also endorsed its admittance to the council.

Since assuming office in January, Lula has played a much larger role in international affairs than his predecessor, Fernando Henrique Cardoso, playing a role in helping end the general strike in Venezuela and was an outspoken critic of the U.S. decision to invade Iraq without the permission of the Security Council.

Reuters, 06.10.03, 4:52 PM ET By Matthew Robinson CARACAS, Venezuela, (Reuters) - The Venezuelan government's desperate scramble to restart oil production after a crippling two-month strike in December and January could damage the OPEC nation's long-term crude output capacity, industry experts said. State oil company Petroleos de Venezuela, also known by its Spanish acronym PDVSA, fired around 18,000 employees for joining the anti-government strike. The company used troops and replacement workers to restore output to around 2.8 million barrels per day (bpd) by April -- just three months after the strike cut production to below 50,000 bpd. But that hurried restoration may cost PDVSA capacity by the end of 2003 or early 2004. Some western heavy oil fields might not be restarted, forcing PDVSA to pump more from reactivated fields and potentially causing well damage, analysts said. "It would not be surprising to see a fall in Venezuelan capacity, given the complex nature of its reservoirs. After every revolutionary change (in oil-producing countries), we've seen a fall in production," said one analyst with a U.S. oil company, who spoke on condition of anonymity. Without the fired PDVSA staff, who sought to force leftist President Hugo Chavez from office, the state company also lacks expertise to counter common wellhead problems like water encroachment, which can cause capacity losses, experts said. "They did what an oil company would have to do. They got the oil pumping again," an oil-service company official said. "But the best-qualified people are gone and they are short of people who do reservoir planning and management. Without incremental (capacity) increases, it will be difficult to maintain output," he added. Analysts said PDVSA would have trouble countering normal oil capacity depletion rates for Venezuela of around 25 percent per year because losses from the strike forced the company to drastically slash its exploration and production budget. PDVSA's 2003 budget has yet to be finalized. PDVSA President Ali Rodriguez last month gave an optimistic assessment of the company's wellhead management and said some wells were producing better than before the strike. But ex-PDVSA managers say wellhead problems could cause a drop in overall capacity by the end of this year, especially in hundreds of smaller, older oil wells in the west.

SQUEEZING WELLS PDVSA may have to compensate for sliding output at mismanaged fields by squeezing other fields harder and so risk eroding capacity of the world's No. 5 oil exporter to maintain output at current levels. "Venezuela has a theoretical sustainable production capacity of 3.9 million bpd. But that number has never been tested. If their real capacity is higher than that, it buys them some time," said an official with a U.S. company, who also spoke on condition of anonymity. Some analysts have said capacity has already fallen under 3.9 million bpd due to under-investment and strike-related damage. They estimate production well below levels claimed by PDVSA. The government claims oil production has been restored to pre-strike levels of 3.1 million bpd. Analysts and local companies say Venezuela briefly touched production of 3 million bpd after the strike before settling around 200,000 bpd lower. PDVSA has also built up a storage cushion of around 27 million barrels this year, which it can draw down to supply customers. Help in stemming capacity declines could come from foreign companies as PDVSA seeks to increase private participation in the oil sector to compensate for lack of internal investment.

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.

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.