<a href=ogj.pennnet.com>Oil & gas Journal Sam Fletcher Senior Writer

HOUSTON, Mar. 28 -- Near-month oil futures prices rebounded above $30/bbl Thursday, rising for the third time this week on the New York Mercantile Exchange as traders reversed their previous prewar sell-down based on earlier expectations of a quick and easy victory in Iraq.

The May contract for benchmark US light, sweet crudes jumped by $1.74 to $30.37/bbl Thursday on NYMEX. That same contract lost a total of $12/bbl in seven trading sessions during Mar. 13-21, with most of that loss occurring before the first bomb fell on Baghdad late last week.

Despite rapid advances by US-led forces in Iraq, futures traders have become more pessimistic during the first week of fighting, especially as they reconsidered the record-low levels of US inventories of oil and petroleum products in light of recent disruptions of 800,000 b/d of crude production as a result of escalating political violence in Nigeria.

Traders previously were confident that the other 10 active members of the Organization of Petroleum Exporting Countries would make up the loss of some 2 million b/d of Iraqi production during the war. But Venezuela still hasn't recovered its previous production level of more than 3 million b/d following a general strike aimed at ousting President Hugo Chávez. Now some industry analysts are wondering whether Nigeria may turn into "another Venezuela."

Moreover, four OPEC members—Algeria, Indonesia, Saudi Arabia, and Venezuela—called for an immediate halt to hostilities in Iraq during the recent 2-day debate by the United Nations Security Council. Algeria's UN representative said the US, UK, and other participants in the invasion of Iraq are in violation of Security Council "norms." Algeria endorsed the resolution recently adopted by the League of Arab States calling for unconditional withdrawal of foreign forces from Iraq.

Energy prices The June contract for benchmark US crudes gained $1.62 to $28.45/bbl Thursday on NYMEX. Heating oil for April delivery shot up 6.74¢ to 81.15¢/gal. Unleaded gasoline for the same month jumped by 5.05¢ to 97.47¢/gal.

The April natural gas contract advanced by 4.9¢ to $5.15/Mcf, "lifted by firm crude oil prices and short-covering ahead of expiration" of that contract, said analysts Friday at Enerfax Daily. "Look for the new May front month to benefit from a short covering rally today if it manages to stay above a key trend line at $5.25(/Mcf). That could ignite fund buying again," they advised.

The US Energy Information Administration reported Thursday that 7 bcf of gas was injected into US underground storage last week, marking "the first time an injection has been seen during that corresponding week," said Enerfax Daily analysts. That compares with withdrawals of 85 bcf the previous week and 75 bcf during the same period last year.

"The slight build in storage gas was seen as negative by traders, but with storage levels still around record lows, it didn't make much difference," the analysts said. US gas storage now stands at 643 bcf, down 918 bcf from a year ago and 580 bcf below the 5-year average.

Meanwhile, aggregate projections for the 40 largest publicly traded producers indicate US gas production in the first quarter of this year will be down 2.2% from a year ago, although up 1.1% sequentially, said Robert S. Morris, Banc of Securities LLC, New York, in a Thursday report.

In London, futures prices for North Sea Brent oil rallied Thursday on the International Petroleum Exchange with reports that the war in Iraq is likely to become more difficult. A US announcement that as many as 100,000 additional troops may be deployed was interpreted as evidence that the allies may have miscalculated the difficulty of the war, analysts said.

The May Brent contract gained $1.53 to $26.82/bbl Thursday. However, the April natural gas contract dipped by 1.9¢ to the equivalent of $2.70/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes gained $1.12 to $26.66/bbl Thursday.

Contact Sam Fletcher at samf@ogjonline.com

Editor EPCN:

I am a regular reader of the EPCN and must commend you for your frank and courageous article in the March 21 edition.

Only the naive or totally uninformed would hold the view that wars are fought for the noble reasons of democracy and freedom.

Wars are fought for resources and domination.

And in this regard I believe that you missed a key reason for the Bush Administration's push to war in Iraq.

And I would call that the Global Economic or the Eco-Global.

Following the end of World War II. The U.S. administration at that time entered into a pact with the royal family of the kingdom of Saudi Arabia; essentially agreeing that successive American governments keep them in power in exchange for a promise that the U.S. dollar would be the currency of choice for all future middle east oil transactions.

This created a continuing demand for the U.S. dollar around the world. It kept the dollar strong against other currencies since countries would need to keep reserves in U.S. dollars in order to purchase oil products and other goods and services.

This arrangement also artificially propped up the U.S. economy.

Over the years, however, the U.S. economy has weakened and has become a net debtor nation.

We import more than we export resulting in balance of payments problems.

And with continuing budget deficits (the Reagan years, the previous Bush administration and again with this present administration) the economy is in terrible shape.

In fact were we not the US, we would be a prime candidate for structural adjustment loans from the World Bank and the IMF.

In November 2001, the Iraqi government demanded that the sale of its oil under the UN sponsored oil for food program be conducted in Euros (the new European dollar) rather than U.S. dollars.

As a result of this action, the Iraqi government making substantial profits on its oil sales, as did the large French and German banks and the new European Central Bank which backed the Euro.

This led to the nations of Venezuela and Iran deciding to follow the lead of the Iraqis in demanding that their oil sales be completed in Euros rather than dollars.

Hence the reason for the U.S. government's determination to undermine the government of Hugo Chavez in Venezuela and labeling Iran as part of the axis of evil-signaling that they are next.

The Saudis also indicated that they were looking at the prospect of having a portion of their oil sales transacted in Euros.

Faced with this situation and the possibility of the dollar losing its place as the currency of choice for international oil transactions and in the long term being replaced as the premier reserve currency, the U.S. administration needed to act quickly.

This argument also provides one of the reasons why the French and German governments were so against a war in Iraq — they would lose profits by an American takeover of that country.

Iraq is a soft target: A nation on the brink.

An improvished people living under UN sanctions for the past 12 years.

No strong army and no real means of defending themselves.

A leader, whom the U.S. installed back in the 70s and supplied with chemical and biological weapons to fight the Iranians, is reviled by his people.

Add to that the U.S. population's fear of another 9/11; the complicity of the general media with the anti- Saddam rhetoric and you have a case against the enemy terrorist nation.

That this US administration is for democracy: Just look at its record at the UN.

It refuses to abide by the rules that it helped to create and when it cannot get its way it decides that everyone else is wrong and decides to act on its own; completely outside of the charter governing actions by member states.

Even now when the non-aligned movement is trying to bring this matter before the general assembly of the UN for an open debate, the U.S. administration is threatening the various countries with punitive actions.

The administration boast that it has 35 nations with a combined population of 1 billion on its side, but does not state that there are approximately 190 nations in the world with a gross population of over 6 billion; the majority of whom by their voice and actions are against this war.

Additionally, the United Nations General Assembly is made up of over 160 nations, so by saying that you have a following of 35 nations and that that somehow gives your actions legitimacy by majority, seems to me to be fuzzy math.

In your article, you stated that history would tell whether this administration is correct in its action.

I beg to differ. By trying to block open debate and labeling all persons with a different opinion as unpatriotic, history has already been told.

My mother always said there are three sides to a story: My side, your side, and then there is the truth."

Unfortunately, in war, the first casualty is always the truth.

May God bless America.

Thank you very much for this forum.Keep up the good work.

Wayne Burnette Middle Smithfield Township

<a href=www.vheadline.com>Venezuela's Electronic news Posted: Thursday, March 27, 2003 By: PETROLEUMWORLD

Crude oil futures at the New York Mercantile Exchange are expected to open more than $1 a barrel higher Thursday, on growing fears that Iraqi production may stay off the market longer than many had expected as the war in Iraq drags on.

UK Air Marshal Brian Burridge reportedly said Thursday that it would take three months to restore oil production from Iraq's southern Rumailah field.

Allied forces have seized control of the 1.8 million-barrel-a-day field, and there been reports that oil could start flowing from the region even before the conflict is over. But Burridge dashed those hopes, saying the poor condition of the equipment in the filed will mean it will take much longer to restore production.

"They are in terrible condition," he said. "It will take three months and then we can begin pumping oil.

The comments come amid growing signs that the US-led war is likely to take much longer than many had expected, analysts said.

"People are talking about signs of war being extended longer than expected," said Tom Bentz, an energy analyst at BNP Paribas Futures in New York.

Nymex crude oil futures are expected to open $1 higher, while heating and gasoline futures are seen opening 300-350 points higher.

Also supporting prices are uncertainty over the outage of nearly 40% of Nigerian production and concerns about tight gasoline supplies ahead of the summer driving season, Bentz said.

All of those factors are likely to lift the front-month May crude futures to $30 a barrel, Bentz said. Once that psychologically important level is taken out, prices could surge as high as $31 a barrel, he added.

May-June Crude Spread Widens

In a sign of growing supply tightness, the nearby Nymex May-June spread has widened to nearly $2 a barrel. The spread had narrowed to less than $1 last week as prices tumbled on hopes of a quick end to the Iraq war.

Meanwhile, it remained unclear how quickly Nigerian output would return to normal.

The Ijaw militants battling Nigerian forces in the oil-rich Niger Delta called for a ceasefire Wednesday after the state government agreed to support their demands ahead of next month's general elections.

The move raised hopes that Nigeria's production, down 40% because of the violence, will quickly return to normal as oil companies resume operations.

But the three major oil companies have yet to restore production or return staff to the country, and traders say the production shut in continues to cause severe delays in oil loading out of Nigeria.

"There are still disruptions in Nigeria," one trader said. "It's very difficult to say where the delays are. April cargoes are also being switched around now. There have been a lot of date switches and no one seems to know where their cargoes are."

The situation is likely to remain unclear for some time, he added.

In overnight trading, May crude ended up $1.07 at $29.70, while April heating oil futures were up 289 points at 77.30 cents a gallon. April gasoline futures were up 353 points at 95.95 cents.

By Masood Farivar, Dow Jones Newswires; 201-938-2094; masood.farivar@dowjones.com

URL Reuters, 03.27.03, 2:18 AM ET

SINGAPORE, March 27 (Reuters) - Oil prices rose two percent on Thursday, boosted by possible prolonged supply stoppages from Iraq, as U.S.-led forces try to oust Saddam Hussein, and Nigeria where civil unrest has cut crude output by 40 percent. Data showing a fall in U.S. gasoline stocks, at a time when refiners are normally scrambling to build inventory, pushed U.S. gasoline prices sharply higher with traders fretting over the chances of a supply crunch during peak demand in the summer. At 0701 GMT, U.S. light crude was up 64 cents at $29.27 a barrel. London's Brent crude was 48 cents higher at $25.77 a barrel. "OECD stocks are relatively low and that's a bit of a worry. Things are tight. The market is probably getting a little nervous ahead of summer driving season. The United States really needs sweet Nigerian crude to crack into gasoline," said David Thurtell, commodities strategist at Commonwealth Bank in Sydney. Nigerian crudes produce a high yield of gasoline when refined, ideal for U.S. refiners which should be cranking up gasoline output ahead of the peak-demand summer vacation season. Bloody clashes between warring tribal factions in Nigeria's oil-rich Niger Delta have shut down 800,000 barrels per day (bpd) of output from Africa's biggest producer. Ethnic leaders had agreed to a ceasefire which should allow foreign multinationals, including Royal Dutch/Shell and ChevronTexaco, to return to the country and restore normal output of 2.2 million bpd, local officials said on Wednesday. Nigeria is a major oil exporter to the United States and sent more than 560,000 bpd last year to the world's biggest oil consumer. Energy Information Administration data on Wednesday showed U.S. gasoline tanks declined 2.1 million barrels in the week to March 21 to 199 million barrels, down 16 million barrels from a year earlier. U.S. unleaded gasoline futures made strong gains of 1.58 cents to 94 cents a gallon. An anti-government oil workers' strike in Venezuela had also cut into U.S. gasoline supplies and U.S. refiners were unable to step up gasoline production as much as normal as they worked to meet heating fuel demand during a cold northern winter. The EIA reported a 3.7 million rise in U.S. crude inventories to almost 274 million barrels, above the 270 million mark that U.S. government considers a minimum to keep the nation's refineries operating smoothly, but 56 million barrels below a year earlier. The OPEC producers' cartel has said it will fill any supply disruption due to the Iraq war or the Nigeria clashes, although its crude is not an ideal replacement for the Nigerian grade. WAR ROLLS ON Iraq's oil exports, about 1.8 million bpd before the U.S. launched its invasion on March 20, have come to a standstill. But supplies from other Middle East producers, accounting for 40 percent of world trade, have been running smoothly. Kuwait had shut some oil wells near the Iraqi border at the start of hostilities but restoring some production on Wednesday. Saudi Arabia, Kuwait, Iran, Qatar and the United Arab Emirates ship about 15 million bpd through the Gulf. Fears Iraq might destroy oilfields in a replay of the massive damage inflicted by retreating Iraqi troops in the 1991 Gulf War have not materialised. Iraq's southern Rumaila oilfields, which account for about 60 percent of its 2.5 million bpd production, have been secured by U.S. and British forces with little damage to infrastructure. Kuwaiti officials have said that any remaining wellhead fires in the Rumaila field could be out in three to seven days. U.S. warplanes have been pounding frontline Iraqi positions about 35 km (20 miles) east of the northern oil city of Kirkuk, where oil wells can pump up to 900,000 bpd. Meanwhile, about 1,000 U.S. paratroopers prepared a new front in the north. U.S. President George W. Bush warned on Wednesday against expectations for a quick victory, saying "the war is far from over". U.S. forces have met increasing resistance from Iraqi troops as they have drawn closer to Baghdad in the last few days.

URL by Sharon Albright March 26, 2003

The campus community may be torn with how to feel about the war in Iraq, but it is united in that everyone will be impacted by it.

Along with the concern of oil supplies, there are countless other areas of uncertainty right now, one of which is the job market.

From an economic standpoint, there is a great deal of good news and bad news, according to Jim Palmieri, associate professor of economics. The good news is that gas prices are not expected to rise for the time being.

"If the conflict stays strictly in Iraq, the impact on gas prices here will be fairly minimal-short in terms of length of time-overall," Palmieri said.

The reason for this, Palmieri says, it that the United States relies on many countries for its oil supplies, including Venezuela, Mexico and Saudi Arabia; and there is not a heavier focus on the Middle East for this commodity. But, this is not the case for all nations.

"A lot of Europeans, the French, for example, have a much greater financial interest in Iraq than we have," Palmieri said.

Along with gas prices, the job market is not expected to change very much, according to Palmieri, which is not necessarily good news for job-seeking students.

"It's a tough job market right now," Palmieri said. "Technically, we're not in a recession, but we have very slow growth with unemployment ticking upward."

Palmieri said that the economic situation is a continuation of what started to happen even before the attacks of Sept. 11, 2001.

"I think the biggest thing that has been dragging the economy down is just the uncertainty of things, in the sense that people don't know what's going to happen in Iraq and overseas, so they hold back on spending," Palmieri said. "Markets don't like instability or unpredictability, because when consumers worry, that's difficult for the economy, especially one like ours where two-thirds of our economy is based on consumer spending."

Still, Palmieri said, the national budget remains strong enough that it should not be heavily hit by the additional military expenditures involved in this war.

"WWII had massive impacts on the U.S. economy, both in terms of output and employment," he said. "This war in Iraq is not going to have that same level of impact on output or employment. It's not nearly as big, relative to the size of the economy."

"We have an economy of around $10 trillion," Palmieri said. "So, let's say we spend $40 or $50 billion on this, which is a lot. However, it's not nearly as much as what we did in WWII-relative to the total budget and output."

Spiritual responses

Talk of the war in Iraq carries over from classroom discussions into student's personal conversations and daily lives.

The chapel staff is still in the process of forming ways to be of service to the Simpson community during this time, according to Chaplain Chris Waddle.

"Honestly, we put a lot of our energy into pre-war issues, so now we're left reeling on how to take action now that the war is here," said Waddle. "We're still organizing how to react to this as a pastoral issue and also as a human issue in general, since not everyone shares the same beliefs."

Soon after the fighting in Iraq started, the chapel took its first step with an inter-faith candlelight vigil. Waddle said that it was important to offer this opportunity for students to reflect. Since then, it has opened up a letter writing campaign for students to communicate with soldiers stationed overseas.

"Faith-wise, I think this is a troubling time for a lot of students who are wrestling with how to support our people in the military, when they don't support the war. At the same time, there are others who support the war who feel like they are in the minority."

Waddle said that the way for students to work through this separation in beliefs is to remember that no matter exactly where we stand on our beliefs, we can be united in our opposition to death and destruction.

Diverse reactions

International students on campus seem to stand by Waddle's analysis. Junior Fungasai Nota said that he is opposed to any type of war, and he relates his pacifist position to growing up outside of America. Nota said that the Iraqis, for the most part, are already living in impoverished conditions, which is saddening enough without the added damage of war.

"There is enough human suffering without bringing war into it," Nota said. "When you live around poverty and see the suffering that comes from it, you can't justify adding to it by bringing war into the picture," Nota said.

Another international student differs slightly in her interpretation of the conflict. While junior Ivy Zhang also sides against the war, she comprehends America's reasons for taking action at this time.

"I totally understand President Bush's reasons for saying that it was necessary to take action," Zhang said. "From being here during Sept. 11, I can see how Americans have a great interest in seeing that something like that does not happen again."