cbs.marketwatch.com By Myra P. Saefong, CBS.MarketWatch.com Last Update: 4:03 PM ET Jan. 21, 2003

NEW YORK (CBS.MW) -- Efforts to end Venezuela's eight-week strike failed to put a damper on crude futures Tuesday, with concerns over tighter global supplies in the event of a U.S. war on Iraq taking prices for an expiring crude contract past $35 a barrel.

The price of a barrel of crude for February delivery traded as high as $35.20 a barrel on the New York Mercantile Exchange -- the highest futures level seen since November of 2000 when prices touched $35.84. The contract closed at $34.61, up 70 cents.

Action in March crude was relatively muted in comparison. The contract, which became the lead-month contract as of Tuesday's close, rose by 23 cents to $33.19 a barrel. It traded between $32.10 and $34 a barrel.

Also on Nymex, gold futures closed above $357, taking cues from the U.S. stock market, dollar and developments overseas. See Metals Stocks.

"The focus of the markets is firmly on Iraq," said BridgetonGlobal.com head analyst Jeff Mokychic.

If the market were to receive confirmation to an end of the Venezuela strike, March crude oil would still likely remain supported above $30 per barrel, he said.

Infinity Brokerage Services' head financial analyst John Person noted that it'll take Venezuela at least three weeks to get back to normal production levels if the workers are fully motivated and eager to work.

If workers aren't motivated, however, "it could take as much as two months to see a complete recovery in the pre-strike output levels," he said.

Oil prices could retest the $29 a barrel in a "short period of time" if supplies and shipments are replenished by a quick resolution by the end of this week, he said. But that's as long as a war doesn't break out in Iraq by that time, he added.

For now, supplies remain tight. Updates on U.S. supplies from the American Petroleum Institute and Energy Department won't be released until Thursday morning, a day late due to Monday's Martin Luther King, Jr. holiday. IFR Pegasus expects the data to reveal a 1 million- to 3 million-barrel decline in crude inventories as the week ended Jan. 17.

Efforts on the rise

Michael Fitzpatrick, an analyst at Fimat USA pointed out several diplomatic initiatives Tuesday concerning Venezuela, including ones by the Organization of American States and negotiations mediated by former U.S. President Jimmy Carter.

Additionally, oil tanker workers are reportedly considering an offer from the government aimed at their ending the strike, which began Dec. 2.

In recent days, the level of violence in strife-torn Venezuela has increased.

One man was killed and 27 people were injured Monday when supporters of Venezuelan president Hugo Chavez confronted opposition marchers in a town about 20 miles south of Caracas. At least six have died in political violence since the strike began, with the opposition pressing for Chavez to resign or hold new elections for the presidency.

The Chavez government claims that daily oil output is at around 1 million barrels, but strikers counter that it's at half that amount. Venezuela produced around 3 million barrels per day before the strike began.

Over in the Middle East, Taha Yassin Ramadan, an Iraqi vice president, said Tuesday that Iraq will expand its cooperation with U.N. weapons inspectors under a new agreement worked out in two days of talks but added he's convinced the U.S. military will eventually stage an attack.

Petroleum-product prices continued lower despite the bounce in crude. February unleaded gasoline fell by 1.01 cents to 90.1 cents a gallon. February heating oil closed at 89.47 cents a gallon, down 0.39 cent.

Also on Nymex, February natural gas shed 10.3 cents to close at $5.433 per million British thermal units, but Fimat's Fitzpatrick said prices are likely to move higher amid forecasts for "extremely cold" temperatures this week and expectations of a large decline in last week's U.S. supplies.

Meanwhile, disappointing quarterly results weighed on most oil-service stocks. The Oil Service Index ($OSX: news, chart, profile) traded down 2.6 percent.

The Reuters/CRB Index, a broad-based measure of the commodity futures market, closed at 242.1, up 0.1 percent. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.

www.krnv.com

Caracas, Venezuela-AP -- The world oil market is feeling the effects of a strike that's crippled the fifth-biggest oil exporter. Oil prices are rising today as the general strike called by opposition leaders in Venezuela enters its 51st day.

OPEC says it'll be tough to make up for shortages of Venezuelan oil in the United States, because many U-S refineries are designed to process the type of crude oil Venezuela pumps out.

Meantime, mediators are trying to end the strike, which is aimed at ousting President Hugo Chavez (OO'-goh CHAH'-vez).

They include former President Carter, who's met with Chavez and strike leaders.

Diplomats from six nations will meet in Washington on Friday to talk about how to resolve the crisis. They're part of a push called "Friends of Venezuela."

www.voanews.com VOA News 21 Jan 2003, 16:52 UTC

Former U.S. President Jimmy Carter has proposed a plan to help end Venezuela's political crisis.

Mr. Carter presented the plan to President Hugo Chavez during a meeting Tuesday in Caracas.

The plan calls for an amendment to Venezuela's constitution that would trigger early elections. It also calls for the country to wait until August 19, halfway through Mr. Chavez's presidency, to decide whether he should stay in power.

The Nobel Peace Prize winner says he plans to present his proposal Friday to a meeting of the so-called Group of Friends of Venezuela - the United States, Brazil, Mexico, Chile, Spain and Portugal.

Mr. Carter has been in Venezuela since the weekend to mediate between Mr. Chavez and the Venezuelan opposition.

President Chavez's opponents began a general strike December 2 to force him to resign and call early elections. The walkout has created widespread food and fuel shortages.

On Monday, Venezuelan officials said one person was shot dead and at least 27 others injured following rival street protests between supporters and opponents of Mr. Chavez. It was not clear who fired the shot.

Some information for this report provided by AFP.

www.forbes.com Reuters, 01.21.03, 1:03 PM ET

CARACAS, Venezuela, Jan 21 (Reuters) - Venezuela's bolivar, battered by the nation's political and economic turmoil, slipped 5.1 percent on Tuesday on the 51st day of an opposition strike against President Hugo Chavez.

The bolivar closed Tuesday trading at an average of 1,849.50/1,853 bolivars to the dollar from Friday's close, according to the Central Bank reference rate. The bank did not publish its reference rate on Monday due to the market holiday in the United States.

Traders said the bolivar dipped to an average of 1,908 to the dollar at the close of Tuesday interbank trading due to strong demand for the U.S. greenback. It fell as low as 1,925 bolivars during trading.

The bolivar has lost about 24.3 percent since the start of the year as markets are rattled by the sharp economic downturn and political conflict between President Hugo Chavez and his foes. The currency has lost about 28.5 percent since the opposition strike began on Dec. 2.

Strikers are demanding that the populist president resign and call immediate elections in the world's No. 5 oil exporter. But the combative former paratrooper has refused and is determined to beat the shutdown. The stoppage has slashed Venezuela's vital oil exports.

www.forbes.com Reuters, 01.21.03, 1:03 PM ET

CARACAS, Venezuela, Jan 21 (Reuters) - Venezuela's bolivar, battered by the nation's political and economic turmoil, slipped 5.1 percent on Tuesday on the 51st day of an opposition strike against President Hugo Chavez.

The bolivar closed Tuesday trading at an average of 1,849.50/1,853 bolivars to the dollar from Friday's close, according to the Central Bank reference rate. The bank did not publish its reference rate on Monday due to the market holiday in the United States.

Traders said the bolivar dipped to an average of 1,908 to the dollar at the close of Tuesday interbank trading due to strong demand for the U.S. greenback. It fell as low as 1,925 bolivars during trading.

The bolivar has lost about 24.3 percent since the start of the year as markets are rattled by the sharp economic downturn and political conflict between President Hugo Chavez and his foes. The currency has lost about 28.5 percent since the opposition strike began on Dec. 2.

Strikers are demanding that the populist president resign and call immediate elections in the world's No. 5 oil exporter. But the combative former paratrooper has refused and is determined to beat the shutdown. The stoppage has slashed Venezuela's vital oil exports.