Wednesday's Commodities Roundup

www.miami.com Posted on Wed, Jan. 22, 2003 Associated Press

NEW YORK - Crude oil futures fell on both sides of the Atlantic on Wednesday as worries about supplies from Venezuela and Iraq eased somewhat.

On the New York Mercantile Exchange, nearby March crude slipped 34 cents to settle at $32.85 a barrel.

Petroleum products futures were mixed, with gasoline losing some ground and heating oil surging amid cold weather and a rally in natural gas futures.

February heating oil futures rose 1.72 cent to close at 91.19 cents a gallon. February gasoline closed with a loss of 0.17 cent at 89.93 cents a gallon.

On London's International Petroleum Exchange, March Brent closed down 40 cents at $30.34 per barrel.

Natural gas for February delivery gained 24 cents to settle at $5.673 per 1,000 cubic feet.

In Venezuela, signs of a crack in the eight-week old strike raised the prospect of a full resumption of output.

Tanker pilots who returned to work at Lake Maracaibo Tuesday refused to rejoin the strike despite efforts by dissident officials at state-owned Petroleos de Venezuela SA, or PdVSA, the port captain said Wednesday.

"All the pilots have remained firm in their decision to stay on their jobs," Angel Rivas Flores said.

Lake Maracaibo is a key export area. Two tankers were due to arrive at Maracaibo to lift crude, while four others were completing loading, he added.

But the status of the pilots remained far from clear. Another report indicated that the pilots might rejoin the strike in return for monetary compensation from the opposition.

The fate of the strike may depend on whether the pilots return to work, said Tim Evans, an analyst at IFR Pegasus in New York.

The strike has crippled Venezuela's oil production and exports. Venezuela exported about 3 million barrels a day of crude oil before the strike, nearly half of it to America.

Still, the government seems to be making modest progress in restoring oil production.

Output has risen to 714,000 barrels a day from 662,000 daily barrels just a couple of days ago, dissident PdVSA workers said.

The workers said earlier that they were willing to end the strike and normalize oil operations if an "electoral deal" is reached between the government and the opposition.

The opposition is demanding that President Hugo Chavez resign or call early elections. Chavez has hinted that he may accept early elections but only under the terms of Venezuela's constitution.

As the strike entered its eighth week, Chavez predicted Sunday that Venezuela's oil output would rise to about 2 million barrels a day by the end of January.

Regarding Iraq, while the U.S. continued to raise the prospects of military action, Saudi Arabia, the world's largest oil producer, issued a reassuring statement.

The Saudi ambassador to the U.S., Prince Bandar bin Sultan, said that his country stands ready to increase supply to ensure market stability.

"My government is ready to do more in the next two or three weeks if we see the oil price is not stabilizing and going down to $28 (a barrel)," Bandar told a meeting of the U.S. Conference of Mayors in Washington.

Saudi Arabia played a leading role in the recent decision by the Organization of Petroleum Exporting Countries to hike output quotas by 1.5 million daily barrels.

The OPEC move has done little to prevent oil prices from climbing to new two-year highs, in part because traders believe the extra oil won't reach the market in time to alleviate the supply shortfall created by the Venezuela crisis.