news.ft.com By Kevin Morrison and Adrienne Roberts Published: January 14 2003 20:01 | Last Updated: January 14 2003 21:09

Oil futures prices in London hit their highest since October 2000 after United Nations weapons inspectors said they had proof of weapons-related smuggling.

IPE Brent crude jumped by about $1 to $31.25 after Hans Blix, the chief UN weapons inspector, said in a BBC interview late on Monday that his teams had found evidence of Iraqi smuggling in violation of UN resolutions.

Comments by Jack Straw, UK foreign secretary, that war on Iraq might not need a new UN resolution, added to the oil price momentum.

Late in London Brent was up 41 cents at $30.61 a barrel. By the close in New York, February WTI was 11 cents higher at $32.37 after an earlier high of $32.90.

Nickel prices hit their highest in more than two years on fears that mine closures might cause supply shortages.

The base metal's price rose to $8,105 a tonne in early trade on the London Metal Exchange, a point not seen since October 2000, but slipped back to end at $7,920, compared with Monday's close of $8,010.

The nickel price rose more than 30 per cent last year, compared with gold's 24 per cent jump.

Political instability in both Zimbabwe and Venezuela is seen having an impact on potential nickel production.

Anglo American has warned that it may close its nickel operations in Zimbabwe after export earnings were slashed following the government's harsh 2003 budget measures.

Canadian miner Falconbridge has said the lack of crude oil due to the Venezuelan oil workers' strike has caused it to cut back production at its nickel plant on the Caribbean island Dominican Republic.

The Venezuelan strike has also affected output at Anglo American's nickel mine Lomo de Niquel.

There are concerns over the timing of new nickel mines coming on stream.

"There has been talk that we could see a situation where existing supply is tight and there is no new supply for some time," said Jim Lennon, base metals analyst at Macquarie Bank.

"And that could provide the grounds for a repeat of the price run in 1988/89 when it hit $13,000 a tonne," he added.

ogj.pennnet.com DATE: January 14, 2003 FROM: PR Newswire COPYRIGHT: Copyright © 2003 PR Newswire Association LLC. All rights reserved.

LYONDELL-CITGO Refining LP Expects Return to Near-Normal Operating Rates During February

HOUSTON, Jan. 13 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE:LYO) today announced that operating rates at LYONDELL-CITGO Refining LP (LCR) are increasing. After temporarily limiting operations to approximately 50 percent in late December and early January, LCR expects to increase rates and have both of its distillation units in operation within the next week. LCR is a joint venture between Lyondell and CITGO Petroleum Corporation.

Since the strike in Venezuela disrupted regular contracted shipments, LCR has maintained operations by processing crude oil from a combination of sources, including shipments from Venezuela, purchases on the spot market and inventories on hand. Prior to the strike, LCR was receiving its full contract supply (230,000 barrels per day) of Venezuelan crude oil from PDVSA (Petroleos de Venezuela, S.A.). LCR's total refining capacity is 268,000 barrels per day.

"We're pleased that shipments to LCR are now increasing and that LCR has successfully plotted a course that we expect will take it to near-full rates over the next month," said Morris Gelb, Lyondell's Executive Vice President and Chief Operating Officer. "During this time, our highest priorities continue to be safety and operational excellence at our facilities."

LCR put contingency plans in place prior to the beginning of the Venezuelan strike. Recently the refinery temporarily postponed several discretionary projects, leading to a short-term reduction in the number of contract workers at the facility. No permanent LCR employee positions have been affected. LCR will continue to monitor the situation in Venezuela and will make any necessary adjustments to operations based on delivery logistics and available information.

Lyondell Chemical Company, (www.lyondell.com ), headquartered in Houston, Texas, is a leading producer of propylene oxide (PO), propylene glycol (PG) and other PO derivatives such as butanediol (BDO) and propylene glycol ether (PGE). Lyondell also is the world's number three supplier of toluene diisocyanate (TDI) and a producer of styrene monomer and MTBE as co-products of PO production. Through its 70.5% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America, as well as a leading producer of polypropylene, ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel.

Source: Lyondell Chemical Company

CONTACT: media, Anne M. Knisely, +1-713-309-2643, or investors, Douglas J. Pike, +1-713-309-7141, both of Lyondell Chemical Company

www.thisdayonline.com By Mike Oduniyi

Multinational oil companies yesterday expres-sed excitement over news of the seven percent increase in Nigeria's official Organisation of Petroleum Exporting Countries (OPEC) quota, boasting that they were fully set to meet the new production quota.

Nigeria's quota was increased by 124,000 barrels per day (bpd) to 2.018 million bpd after OPEC at an emergency meeting on Sunday, agreed to raise its production ceiling by 1.5 million barrels per day (bpd) to 24.5 million effective February 1, 2003.

To oil producing companies in Nigeria, the new quota, following an earlier increase of 107,000 bpd effected at the beginning of this year, paved the way to produce from new fields that had been shut in for most part of last year while Nigeria struggled to keep within her former OPEC quota of 1.78 million.

The spokesman for Shell Petroleum Development Company (SPDC), Mr Tom Boham, told THISDAY yesterday that the upward review of Nigeria's output quota would in the interim help solve the production constraint the companies faced.

"It (new quota) is good news for both Nigeria and the companies. We are confident to meet it and even at a short notice," Boham said.

He added that oil companies had been worried about the issue of constraint posed to operating newly discovered fields based on the country's tight production quota.

"If investment had been made on new fields, companies expect a reasonable level of returns," he said adding that Shell was eagerly awaiting the level of production increase that will be shared out to all the companies.

Shell, Nigeria's biggest oil producer started production from its new shallow offshore field EA last December, which is expected to grow into an output of 140,000 bpd. But at the time the field went into production, it was yet to be factored into Nigeria's OPEC quota.

An official of Mobil Producing Nigeria, also described the quota increase as "good news". "We have the capacity to meet increase of even 2.5 million bpd. Right now, major oil companies are producing at a little above 50 percent of their capacity," said the official.

The official added that oil producers hoped OPEC would be just be able to sustain a crude oil price level of between $22 and $28 per barrel.

Meanwhile, oil prices dropped marginally yesterday following the break of the news of the OPEC agreement to lift output.

Light crude fell by 34 cents to $31.20 a barrel while International market reference crude, the British Brent, fell 38 cents to $29.29 per barrel.

Fears that a US. assault on Iraq may be only weeks away, as well as the strike in Venezuela, are helping to support prices that recently hit a two-year high of $33.65 a barrel.

But there are equally worries about how much of the extra oil OPEC can actually deliver.

The 1.5 million bpd increase was divided pro-rata among members, meaning Venezuela was also granted its share of the higher output limit despite the 43-day-old strike that has slashed its exports by 80 percent to 500,000 bpd.

Venezuela, OPEC's third-biggest producer, is fifth in world exporter rankings, while Iraq sells up to two million bpd overseas under the United Nations oil-for-food programme.

OPEC President, Abdullah al-Attiyah, said on Sunday ministers would meet again if Venezuela restores full production. The group's next scheduled gathering is for March 11, 2003.

www.forbes.com Reuters, 01.14.03, 9:35 AM ET

NEW YORK, Jan 14 (Reuters) - NYMEX crude oil futures were expected to push higher at the open Tuesday after the chief U.N. weapons inspector Hans Blix said his teams had found evidence of Iraqi smuggling in violation of U.N. resolutions.

"The comments by Blix came in after there was some softening because of Mexico and OPEC's production increases," said a London-based oil trader.

NYMEX February crude was called 50 cents to 60 cents higher after ending overnight ACCESS trading 56 cents to the upside at $32.82 a barrel, trading $31.88 to $32.85.

In London at 9:30 a.m. EST (1430 GMT), the February Brent crude contract was 66 cents higher at $30.86 per barrel.

Blix, in a BBC interview broadcast late Monday, said his teams in Iraq have uncovered weapons-related smuggling but it was unclear if the goods were linked to weapons of mass destruction. "There has been a considerable amount of import in the weapons sector which clearly is smuggling, and in violation, and they are in fact large quantities," Blix said.

Adding fuel to the bullish sentiment were remarks from Britain's Foreign Secretary Jack Straw on Tuesday stating that war on Iraq might not need a new U.N. resolution.

Meanwhile Baghdad said it had already come clean about arms programs and that its president would fight to the bitter end.

NYMEX oil prices had dipped in electronic trading when Sunday's OPEC decision to raise crude output by 1.5 million barrels per day (bpd) to compensate for losses from the Venezuelan strike was followed by a Mexico promise to increase crude exports by 120,000 bpd to 1.88 million bpd.

With the Venezuela general strike in its 44th day, oil traders will decide the likelihood that mediation by the United Nations and the United States might help to break the deadlock between Venezuelan President Hugo Chavez and opposition leaders. Chavez will hold talks with U.N. Secretary General Kofi Annan on Thursday.

Frigid temperatures in the U.S. northeast, with the six- to 10-day forecast calling for below normal readings, should continue to support heating oil futures.

The next round of U.S. oil inventory data, due out Wednesday morning, will provide a fresh snapshot of the Venezuela strike's effect on U.S. oil supplies, already hovering at historic lows.

NYMEX February heating oil is expected to open 1.25 cents to 1.50 cents higher after ending ACCESS trade up 1.61 cents at 89.99 cents a gallon, the overnight high.

NYMEX February gasoline is expected to open 1.00 cent to 1.25 cents higher after ending ACCESS trade up 1.20 cents at 91.10 cents a gallon, also the overnight high.

www.theage.com.au January 15 2003

World oil prices rose yesterday, defying OPEC's decision to pump an extra 1.5 billion barrels a day, with traders concerned about the threat of an Iraqi war and a strike in Venezuela.

OPEC agreed at the weekend to increase production in an attempt to curb a surge in prices.

But underlying concerns about the situations in Iraq and Venezuela loomed large, as a large build-up of US forces pressed ahead and as oil-exporting Venezuela entered the seventh week of a crippling general strike.

New York's February-dated futures contract for light, sweet crude rose 58 US cents to $US32.26 a barrel.

In London, the February benchmark Brent North Sea crude oil futures contract advanced 53 US cents to $US30.20 a barrel. .

State-owned Petroleos de Venezuela (PDVSA) president Ali Rodriguez said on Monday that Venezuela aimed to increase production to two million barrels per day as it fixed and regained control of refineries and other oil facilities.

Analysts said OPEC's decision to lift production quotas had been widely expected.

Saudi Arabia's announcement that it could raise its own output if needed to 10.5 million bpd within two weeks, from a new quota of just under eight million, had only briefly lowered prices.

"The events of the weekend confirm a few suspicions and indicate that output is going to be above December levels, which I think is quite critical," said GNI analyst Lawrence Eagles in London.

"We've seen Saudi Arabia intimating that it had raised output prior to the meeting to offset the shortage to the United States," Mr Eagles said.

Saudi Arabia appeared to have chartered more tankers to the United States, indicating US deliveries were also set to rise next month, he said.

"What is clear is that Saudi Arabia, which is the pivotal player because of its spare capacity, is saying that it doesn't want to see prices rising further because it realises that would be detrimental to world economic growth," Mr Eagles added.

-AFP