seattletimes.nwsource.com By ERIK T. BURNS Dow Jones Newswires

OPEC Secretary-General Alvaro Silva said Friday he is worried about the current high level of oil prices, but said there is no shortage in supplies."We believe that the problem is not the supply. The market is well-supplied," Silva said, while attending the World Economic Forum's annual meeting. "OPEC is worried about the level of prices," he added."At present, the problem is the threat of the war (with Iraq), the nervousness in the market, and the situation of Venezuela," Silva said, referring to the seven-week strike that has crippled Venezuela's oil industry and reduced exports to a trickle.

But Venezuelan output is increasing, he said. The country is currently producing around 1.2 million barrels a day, and expects to increase that to 2 million by the end of February. Venezuela's capacity is around 2.7 million to 2.8 million barrels a day."The current situation (in Venezuela) is a transitory situation," Silva said.

He added that a "war premium" in the crude oil price based on fears of disruption to Iraqi oil exports, in the event of a war, was more difficult to address. "That is out of our control," Silva said.

Silva also said OPEC is concerned about the possibility of oversupply in the market going into the second quarter, following its Jan. 12 decision to raise its output ceiling by 1.5 million barrels a day, effective Feb. 1.

Oversupply in the second quarter, when warmer weather traditionally leads to lower demand, "could cause a violent drop of the price," Silva said.

Asked about non-OPEC producers, Silva said cooperation with them is getting better. "They share with us the concept of the stabilization of the market," he said.

www.forbes.com Reuters, 01.24.03, 1:36 PM ET

NEW YORK, Jan 24 (Reuters) - NYMEX crude futures soared above $33 a barrel on Friday as the United States pressed Iraq to allow U.N. arms inspectors to interview Iraqi scientists privately to credibly determine whether Iraq is keeping banned weapons.

Venezuelans now on a 54-day-old strike to force President Hugo Chavez to step down said they will not back down until early elections are called, adding fuel to the day's rally.

At 13:20 p.m. EST (1820 GMT), NYMEX March crude was up 91 cents at $33.16 a barrel, after surging to $33.24. It hit a session low of $32.11 in early trade.

"We are seeing supply concerns front and center again ... at the bottom of the Iraq and Venezuela situation is the fear of supply disruptions," said a NYMEX floor trader.

In London, Brent March crude was up 66 cents at $30.38 a barrel, after extending session highs to $30.49.

Traders are awaiting Monday's report from U.N. weapons inspectors on and U.S. President George W. Bush's State of the Union address on Tuesday for further price direction.

The United States continued to make its case for war on Friday, saying it had evidence Iraq has maintained a program to produce weapons that have been banned since the 1991 Gulf War.

The White House said Iraq's refusal to allow scientists to be interviewed without minders was "unacceptable." Such interviews should be allowed without delay, it said.

Opposition to the U.S. stand has mounted, with China and Russia joining France, Germany and Canada on Thursday in urging that U.N. weapons inspectors be given more time in Iraq.

Two U.S. Navy vessels including a hospital ship sailed along the Suez Canal on Friday, heading for the Red Sea and on to the Gulf amid a military build-up for a potential war against Iraq, shipping sources said.

And a British ship carrying arms and ammunition should arrive at the Mediterranean city of Port Said at the entrance of the Suez Canal on Saturday, also headed for the Gulf, the sources added. News that Iraq would "cause damage or destruction" to its own oil fields if war broke out, according to a senior U.S. defense official, also supported prices.

But the official also said the U.S. has plans to secure and protect the fields in the event of hostilities, somewhat calming nervous traders.

NYMEX crude hit a 26-month high of $35.20 on Tuesday on fears of a U.S.-led war on Iraq.

Some of the early weakness was prompted by news that Venezuelan oil exports jumped 62 percent in the week to Friday to 688,000 barrels per day (bpd), or 25 percent of capacity.

Venezuela, a major oil supplier to the United States, exported 2.7 million bpd before the strike. Striking oil workers said on Thursday that Venezuela's production had risen to 812,000 bpd or 25 percent of capacity.

On Friday, those workers said they would press on until the government agreed to early elections and a deal to return them to their jobs.

Amid a cold snap in the U.S. Northeast, NYMEX February heating oil was up 1.87 cents at 93.40 cents a gallon.

Gasoline futures were up as European oil traders shipped gasoline to Venezuela to make up for scarce fuel supplies caused by the eight-week general strike.

NYMEX February gasoline was up 2.29 cents at 92.10 cents a gallon, moving within a 89.90-92.20 cent range.

ogj.pennnet.com   By OGJ editors WASHINGTON, DC, Jan. 24 -- The US remains vulnerable to oil supply shocks from Venezuela and other foreign suppliers because the nation still lacks a comprehensive energy policy, White House officials said.

US State Department officials said Thursday the political crisis in Venezuela was still "very tense" and that the "urgency of reaching a peaceful resolution remains."

"This is a long-term issue, but if 10 years ago, Congress and the administration had been able to work in a long-term way on energy, we wouldn't be in the spot we could be in today, with action on Venezuela, for example, driving up the price," White House spokesman Ari Fleischer said Wednesday.

Earlier this week oil prices temporarily moved above $35/bbl for the first time in 2 years before retreating to lower levels above $30/bbl. But more oil from key US allies, including Saudi Arabia, may keep market conditions in balance to avoid a Strategic Petroleum Reserve release, officials suggested.

"The President expressed his gratitude to OPEC (Organization of Petroleum Exporting Countries) and to Saudi Arabia for their increase in production," said Fleischer.

Longer-term, the US needs to have a blueprint so the country is better insulated against sudden supply shortages, he added.

"There are a variety of ways to approach this issue, including increased conservation, increased production, and increased diversification of supply. But it still remains an issue that the American people want people in Washington to deal with long-term," Fleischer said.

Congress debated but failed to pass a sweeping energy bill last year. This year key lawmakers, including Billy Tauzin (R-La.), chairman of the House Energy and Commerce Committee, say they want to pass a comprehensive bill. But it is unclear whether there is enough interest by members to achieve that goal.

Venezuela update Members of the Organization of American States met Friday with US Sec. of State Colin Powell, hoping to move forward with a plan to end the impasse. Oil exports over the past 2 months have fallen by more than 50% because of striking oil workers seeking to oust populist President Hugo Chávez from power.

Earlier in the week, former President Jimmy Carter sought to broker a compromise by offering two options both generally supported by the Bush administration. One was for a constitutional amendment that would shorten terms of Venezuela's president and National Assembly, to be followed by elections. A second option called for a Venezuelan referendum in August, which could trigger presidential elections in September.

"We think these options offer both sides in Venezuela an excellent basis to craft a solution to the immediate impasse with international support for implementation of the agreement. So we'll see if they will pick those up," said Boucher. "We do think the government and the opposition should consider these options very carefully."

Similar options previously have been suggested by Chávez's opponents but not accepted by government officials.

EIA analysis An Energy Information Administration analysis said Thursday that even if additional oil imports from other countries begin to arrive, it is doubtful that, without near-normal levels of Venezuelan imports, US crude inventories can be maintained significantly above 270 million bbl with US refinery inputs remaining near 15 million b/d.

"One or the other clearly has to fall," EIA said. In a separate EIA report, it appeared that refinery inputs were declining while imports, largely from Saudi Arabia, were increasing.

Despite predictions from some analysts that inventories may slip by 3 million bbl, the US Department of Energy reported Thursday that US oil stocks grew by 1.5 million bbl last week, reaching 273.8 million bbl. The American Petroleum Institute later reported a smaller increase of 181,000 bbl to 272.4 million bbl for the same period.

Based on DOE figures, total US commercial petroleum inventories last week were 44.1 million bbl below the 5-year average. "In other words, relative to a normal pattern, the US market tightened at a rate of 1 million b/d," said Paul Horsnell, head of energy research for JP Morgan Chase & Co., London (OGJ Online, Jan. 23, 2003).

www.afxpress.com

LONDON (AFX) - Oil prices firmed in late afternoon trade on US fund buying, ahead of a report Monday by weapons inspectors to the UN Security Council, dealers said.

At 5.07 pm, March-dated Brent crude futures traded up 38 cents on the day to reach 30.10 usd a barrel, compared with 29.78 usd in late morning trade.

In New York, the reference light sweet crude March contract gained 46 cents a barrel to reach 32.71 usd.

"There is some fund buying coming in from the US side, with people adding to long positions, which explains the recent strength this afternoon," said trader Mark Keenan at ABN Amro.

He said investors were also squaring positions to limit exposure to risk over the weekend, both from the negative effects of headlines from Venezuela and any gains relating to a possible war with Iraq.

The chief UN weapons inspectors are due Monday to give a key report to the UN Security Council.

Diplomats believe the US, which with the UK is massing tens of thousands of troops in the Persian Gulf region, might use a negative report as a reason to launch military action against Iraq.

However, France and Germany issued a joint declaration yesterday in which both countries restated their opposition to any unilateral decision by the US to go to war.

Analysts say unilateral action by the US poses a greater threat to global oil supplies than action by an international coalition, citing the risk of a backlash and political instability in other Arab oil producers, notably Saudi Arabia.

OPEC secretary general Alvaro Silva-Calderon said the world is not on the verge of an oil crisis yet, but the cartel can do little if the US launches military strikes on Iraq.

"We are in a transitory situation and not on the edge of an oil crisis," he said, at the World Economic Forum in Davos.

When asked what would happen to global oil prices in the case of a military conflict, he added: "We don't know. It's out of our control."

Recent reports said OPEC output is currently at capacity, leaving little room for increases if a shortage looms.

Keenan said prices had retraced lower this week on signs that the eight-week long strike in Venezuela was beginning to collapse.

Venezuela's opposition showed support for a proposal to be taken up by international mediators in Washington today, saying a 54-day-old strike would be called off if agreement on early elections is reached.

However, Kevin Norrish at Barclays Capital said the country's exports remain severely curtailed, despite an admission by oil workers that output had recently increased to around 715,000 bpd.

Pre-strike output stood at just under 3.0 mln bpd according to industry estimates.

frank.watson@afxnews.com

sg.biz.yahoo.com Saturday January 25, 12:42 AM

LONDON (Dow Jones)--The Organization of Petroleum Exporting Countries raised its forecast for 2003 demand by 80,000 barrels a day to 77.17 million b/d from earlier forecasts as colder-than-normal winter temperatures and changes to power generation in Asia boosted consumption.

In its monthly oil market report published Friday, OPEC also revised up its 2002 demand to 76.55 million b/d from 76.43 million b/d in the previous report for the same reasons.

The call on OPEC crude for 2003 was unchanged from the previous report at 24.7 million b/d.

Production from the OPEC-10, which excludes Iraq, fell 1.825 million b/d in December versus November to 24.840 million b/d due to the general strike in Venezuela which significantly reduced production and exports from the oil-rich country.

According to the report, Venezuela's output in December fell to 843,000 b/d from 2.935 million b/d in November.