www.indystar.com By Brad Foss The Associated Press March 1, 2003   If history is any guide, consumers should brace for even higher gasoline prices, which already are above $2 a gallon in some places. The wholesale price of gasoline has risen from March to May every year since 1985, according to an analysis by Cameron Hanover, an energy risk management firm based in New Canaan, Conn. Pump prices have tended to follow suit, statistics kept by the Energy Department show. "We're expecting a further round of price increases at the retail level," said Jacob Bournazian, an analyst at the Energy Information Administration, the statistical arm of the Energy Department. "It could be anywhere from 4 to 8 cents." The national average retail price for regular unleaded last week was $1.66 per gallon, 54 cents above year-ago levels. In Indianapolis, self-serve regular was selling at an average $1.67 a gallon on Friday, according to AAA Hoosier Motor Club. The springtime pattern of rising prices coincides with the period when refiners shut down equipment, scrub it clean and switch from winter- to summer-grade fuel. That process, known as "turnaround," causes supplies to shrink temporarily and prices to rise. Whether the 18-year seasonal trend is extended -- or ended -- in 2003 depends on factors ranging from a possible war in Iraq to the supply from Venezuela, whose oil industry strike has resulted in sharply reduced exports. If U.S.-led military action against Iraq proceeds quickly and without any disruption in the flow of Middle East oil, analysts believe the price of crude, now close to $37 a barrel, could drop quickly, bringing today's high gasoline prices down, too. "That could kill the (seasonal) trend," said Ed Silliere, an analyst at Energy Merchant LLC in New York. The ability of refiners in the United States, Europe and elsewhere to make up for the expected shortfall from Venezuela also could tip gasoline prices either way, Silliere said. Still, analysts say all signs point to the annual trend being magnified by geopolitics and the current supply-demand imbalance. Nationwide inventories of gasoline are nearly 3 percent below year-ago levels with Venezuela's refineries running far below capacity, and analysts said the situation could get worse. Peter Beutel, president of Cameron Hanover, said the confluence of outside factors makes it difficult to predict what will happen in gasoline markets, but his advice to clients is this: Don't make large bets prices will fall. In 16 of the last 18 years, June futures trading on the New York Mercantile Exchange rose from March 1 to May 15. In 1993 and 1998, the June contract rose from March 1 to May 1, before falling two weeks later. Gasoline for April delivery was up 2 cents to $1.04 a gallon Friday. The monthly average for retail prices was higher in May than in March in 15 of the last 18 years. Pump prices declined slightly in 1986, 1997 and 2000.

news.mysanantonio.com By Bruce Stanley Associated Press Web Posted : 03/01/2003 12:00 AM   LONDON — A recent surge in Saudi Arabian oil production should help cool sizzling prices when crude shipments from the Persian Gulf reach U.S. ports within a month, industry analysts said Friday.

Prices eased a day after spiking to a 12-year high in the United States on concerns about tight supplies.

Some analysts said OPEC member countries were pumping furiously and argued the market turmoil would ease once these fresh barrels hit the market.

"A lot of the crude produced in January has not yet arrived. The situation may change drastically," said a senior source at the Organization of Petroleum Exporting Countries.

Fears of a war with Iraq are partly to blame for the latest run-up in prices. April contracts of U.S. light, sweet crude climbed as much as $2 on Thursday to peak at $39.99 a barrel in New York, the highest level since October 1990, when Iraq occupied Kuwait.

On Friday, the April contract fell 60 cents to settle at $36.60 in New York.

In London, April contracts of North Sea Brent fell 25 cents to end at $32.79 a barrel.

Fears that a war might create supply shortages have inflated prices by at least $5 a barrel, the OPEC source said, speaking on condition of anonymity from the group's headquarters in Vienna, Austria.

However, analysts said OPEC probably could make up the 2 million barrels a day that Iraq would be unable to export if fighting broke out in the gulf. OPEC supplies about a third of the world's oil.

The cartel's most powerful member, Saudi Arabia, says it can produce up to 10.5 million barrels a day. That is substantially higher than the 8.5 million barrels a day the International Energy Agency, a watchdog for oil-importing countries, said the country was producing in January.

"I think they're well above 10 million barrels, and pumping," said Peter Gignoux, managing director of the petroleum desk at Salomon Smith Barney.

Much of this additional crude is already on its way to the U.S. East Coast, a journey lasting about 45 days.

"There is a considerable amount of oil en route from Saudi Arabia," agreed Lawrence Eagles, head of commodity research for London brokerage GNI Ltd.

Although it was unclear how many barrels actually were in transit, Eagles said the market would be "relatively balanced" if this fresh Saudi Arabian oil was counted as part of the global supply.

The United Arab Emirates and other OPEC members that aren't already producing at full capacity could boost the cartel's output further to help make up for any missing Iraqi barrels.

"Altogether they can cover it — barely," the OPEC source said.

The recent price spike was most pronounced in the United States, the world's biggest importer of crude. While Iraq has been a factor in this surge, analysts said cold weather and the fallout from a strike in Venezuela's oil industry have played a bigger role.

"We've lived without Iraqi oil before. This doesn't bother me," Gignoux said.

Venezuela steadily is ramping up its production in the wake of a crippling strike. It has boosted exports from 700,000 barrels a day a few weeks ago to 1.4 million barrels today, and further increases are expected, Eagles said.

However, U.S. importers were slow to seek alternative sources of crude when the strike first disrupted Venezuelan exports in December.

This slow response, together with the longer time it takes crude to reach North America from Saudi Arabia, has helped cause a temporary squeeze in the U.S. market, analysts said.

On top of the surge in crude prices, heating oil soared to historic highs this week as snow buried large parts of the United States.

www.forbes.com Reuters, 02.28.03, 2:48 PM ET

CARACAS, Venezuela (Reuters) - OPEC's secretary-general said Friday world oil supplies were sufficient despite recent price rises due to war fears, and raised concerns that markets could even face oversupply next quarter. "The outstanding threat of war is creating the (price) rise," OPEC Secretary-General Alvaro Silva told Venezuelan state news agency Venpres in a telephone interview from Vienna. "Next quarter we are going into summer where there is less demand for oil and if for some reason there is an oversupply, it could induce a fall in prices that does not benefit anyone," the former Venezuelan oil minister said. The threat of a U.S. attack on Iraq and the disruption of oil supplies from strike-hit Venezuela has helped to drive U.S. crude prices to post-Gulf War highs, edging near $40 a barrel during Thursday trading. U.S. oil fell 30 cents Friday afternoon to $36.90. Silva told Venpres the cartel had sufficient shut-in capacity to meet any increase in demand. On Thursday he told reporters the Organization of Petroleum Exporting Countries had another 4 million barrels per day (bpd) of spare capacity, although analysts peg the number closer to 2 million bpd. OPEC next meets on March 11 and is expected to leave official supply quotas unchanged. Delegates have said OPEC may suspend production quotas during the period of any war.