Crude oil rises on supply fears

www.globeandmail.com Bloomberg News Tuesday, January 14, 2003 – Page B22

Crude oil rose on expectations that extra oil from a production increase by the Organization of Petroleum Exporting Countries won't reach refineries in the United States until March at the earliest.

On Sunday, OPEC members agreed to boost their targets by 6.5 per cent next month to make up for export disruptions in Venezuela caused by a strike. Tankers take at least six weeks to reach U.S. refineries from Saudi Arabia, which has more spare capacity than other OPEC members.

"We've got supply problems and it doesn't look like they'll be solved any time soon," said Ed Silliere, vice-president of risk management at Energy Merchant LLC in New York, which markets gasoline and heating oil to local distributors. "The big worry continues to be Venezuela."

Wheat futures fell to their lowest in more than six months on expectations that U.S. farmers will boost their harvest at a time of weak export demand.

U.S. farmers raised their winter-wheat plantings by 6 per cent from a year earlier to 44.2 million acres, the highest in five years, the U.S. Department of Agriculture reported on Friday. It also pegged the wheat surplus on May 31, the end of the sales season, at 418 million bushels, or 20 per cent more than expected in December, because of poor sales.

Natural gas futures rose for a fourth session in five on expectations that colder weather in the U.S. Midwest and East over the next two weeks will spur a surge in heating demand.

Freezing temperatures are forecast this week from Chicago to Boston and as far south as New Orleans, according to the National Weather Service. The forecast signals increased furnace use that may trim gas supplies, already down 16 per cent from last year, traders said.

Jan. 10 to Jan. 25 will be the coldest two-week period since late 1995 and early 1996 from the Rocky Mountains to the Atlantic coast, AccuWeather senior meteorologist Bernie Rayno said on Friday.