www.dailytimes.com.pk

LONDON: OPEC oil output edged higher in January as Saudi Arabia opened the taps to compensate for some of the shortage from strike-bound Venezuela, a Reuters survey found on Wednesday. January production rose 380,000 barrels a day from December to 25.65 million bpd but remained 1.67 million below volumes in November, before the Venezuelan strike, according to the survey of industry officials and monitors. Extra supplies from Saudi Arabia, the UAE, Nigeria and Iraq outweighed a further decline from Venezuela where rebel oilworkers kept a strangehold on exports in their bid to force President Hugo Chavez from office. While Caracas by the end of the month had restored output above a million barrels daily, average production was only 650,000 bpd, versus a million bpd in December and pre-strike November output of more than three million. Expectations are for a further gradual increase in February. Geneva-based consultancy Petrologistics is projecting 1.3 million bpd for the month. Saudi Arabia added 500,000 bpd to reach 8.55 million in January. Riyadh appeared ready to ratchet production higher but shipping and industry monitors said it had encountered difficulty in marketing any more. Saudi Oil Minister Ali al-Naimi has promised to keep world markets adequately supplied if a US-led war on Iraq comes while Venezuelan output remains hamstrung. Petrologistics is projecting 8.67 from Saudi in February but with spare capacity stretched in most other OPEC members, the group looks likely to fall short of its new February target. Naimi said at the weekend that Riyadh aimed to keep flows from the 10 OPEC members with quotas, excluding Iraq, to the 24.5 million bpd limit that ministers introduced in mid-January. That target is not officially implemented until February 1 but with Venezuela still way below par, the OPEC 10 in January remained a long way short of the target. They pumped 23.16 million bpd, up 290,000 bpd from December. Apart from Saudi, only the UAE and Nigeria were able to call on spare capacity to add any significant volume, rising by 50,000 bpd and 60,000 bpd respectively. Ironically, second only to Saudi in lifting output was Iraq, helping contain prices at about $33 a barrel for US crude in the countdown towards what most in the oil industry see as an inevitable war. Baghdad’s exports under the UN oil-for-food programme ran at 1.74 million bpd in January, up 90,000 bpd on the month. It pumps another 750,000 bpd for domestic use and border trade. With possible war only weeks away, the United States easily remains Iraq’s biggest customer. Traders estimated Iraqi sales to the US approached a million barrels daily, double last year’s average as refiners sought to fill the gap from Venezuela. The Reuters survey seeks a best estimate of flows from OPEC countries based on the views of officials, industry monitors and analysts inside and outside member countries. —Reuters

www.news.com.au February 06, 2003

WORLD oil prices rose as US Secretary of State Colin Powell presented declassified evidence to try to persuade the United Nations Security Council that Iraq was defying weapons inspectors.

Prices shot up ahead of Powell's speech as traders sweated over the possible content, but then settled back a little, still closing above the previous day's level.

"What you have for the oil market right now is uncertainty," Bear Stearns market analyst Fred Leuffer said.

"There is a confluence of low inventories in the United States, Venezuelan production running at less than 40 per cent of normal, and of course prospects for war."

Leuffer estimated oil prices carried a premium of six to eight US dollars because of the war risk.

www.forbes.com Reuters, 02.05.03, 5:45 PM ET

NEW YORK (Reuters) - Gold prices fell prey to profit-taking after hitting 6-1/2-year highs Wednesday while oil was lifted by a steep fall in U.S. stockpiles and Secretary of State Colin Powell's speech to the U.N. to provide evidence he said proved Iraq hid banned weapons from U.N. inspectors. COMEX gold futures ended lower as Powell laid out the U.S. case at the U.N. Security Council that Iraq had made no effort to disarm as required by U.N. resolutions to avoid war. "I guess it's a classic example of buying the rumor and selling the news," said Drummond Gill of bullion dealer ScotiaMocatta in Toronto. "I think the jury is still out. I think he did a good job of trying to make the case." COMEX April gold ended $2.70 lower at $377.20 an ounce. Bullion was also pressured by a bounce in the dollar off a four-year low and a healthy rise in the stock markets, which could not hold onto the gains and ended the day lower. "Markets don't go in straight lines ... some periodic profit-taking has to be expected," said Kevin Crisp, precious metals analyst with Dresdner Kleinwort Wasserstein. "But I don't sense a wholesale exodus. You get froth on the top of a market and it gets blown off," he added. Gold has gained $30 an ounce, or 8.6 percent, since the start of the year, bolstered by fears of a war with Iraq, jitters over North Korea's nuclear ambitions and weakness in the dollar. Overnight, Japanese investors shoveled more money into gold futures on the Tokyo Commodity Exchange (TOCOM), sending yen-based contracts to 10-1/2-year highs in record turnover. In a high stakes address to the 15-nation Security Council, Powell appeared to change few minds, with envoys from France, Russia, China, Germany, Mexico, Angola, Guinea, Syria and Cameroon expressing doubts about war and hoping inspections would continue. However, staunch ally Britain and foreign ministers from Spain and Bulgaria were forceful in endorsing his presentation while Chile and Pakistan took a more neutral position. Powell, in a bid to win over anti-war sentiment at home and abroad, said Iraq gave orders to sanitize documents referring to "nerve agents," and cleaned up chemical weapons sites. The Bush administration argues that war may be the only way to stop Saddam Hussein's defiance of U.N. resolutions. NYMEX crude oil futures rose 1 percent following Powell's U.N. speech and government data showing a steep fall in U.S. stocks of heating oil, as freezing temperatures stoked demand and fuel distributors began to hoard supplies ahead of a possible war. "I don't think that Powell was persuasive enough to convince, let's say, the French. That may lead to the U.S. having to go on its own or with a small international group," said Tim Evans, senior market analyst at IFR-Pegasus. NYMEX March crude oil settled 35 cents higher at $33.93 a barrel, after hitting a high of $34.28. March gasoline was up 3.09 cents at $1.0315 cents a gallon, while March heating oil was up 3.21 cents at 99.40 cents a gallon. Prices were supported by news of a big drop in U.S. fuel stocks -- already depleted by a 65-day opposition strike in Venezuela, which normally supplies over 13 percent of U.S. crude and refined product imports. U.S. heating oil stocks shrank 11 percent after a long cold snap in the high-consumption Northeast region, a government report showed. Stocks have been depleted by cutbacks in U.S. refinery production as high crude oil prices slash plants' profit margins. "Without the flexibility that ample inventories provide, oil markets now are as tight as a fully stretched rubber band. Whether the rubber band breaks or not will largely depend on the pace of demand in coming weeks," the EIA said. Distillate stocks, including diesel fuel and heating oil, dropped 10.3 million barrels, the second largest weekly drop on record. Distillate fuel demand recorded the highest weekly average ever, the Energy Information Administration said. "That's far above what was expected from weather," said Jim Ritterbusch, president of Ritterbusch and Associates in Illinois. "Distributors are stocking up in advance of a war." (Reporting by K.T. Arasu, edited by Gary Crosse; Reuters Messaging kumarasamy.thennarasu.reuters.com@reuters.net; 312 408 8720)

biz.scmp.com Thursday, February 6, 2003 REUTERS in Singapore    PetroChina has made its first direct petrol sale to the United States' Gulf Coast, taking advantage of a squeeze in US supplies due to a drop in exports from strike-bound Venezuela, traders said yesterday.

The top Chinese oil firm had fixed a 40,000-tonne parcel of 90-octane petroleum, for loading early this month, from the northeast Chinese port of Dalian to the US Gulf, they said.

"Chinese barrels normally move to the US via traders or majors when the arbitrage window is open, but this is the first time PetroChina has sold gasoline on a delivered basis," a trader said.

She said the cargo had been sold to an oil major, but declined to give details.

PetroChina, China's second-largest refiner, accounts for about 40 per cent of China's total petroleum exports, which amounted to 51.7 million barrels last year.

Asia-based traders expect the strong US market to draw fresh shipments of Asian petroleum this month, following a slew of US-bound cargoes last month from China, South Korea and Singapore.

A two-month general strike in Venezuela has severely disrupted overseas oil sales from the world's fifth-biggest exporter, which supplies about 13 per cent of US oil imports.

The disruption has eaten into US fuel stocks, pushing up benchmark oil prices in the process.

www.morningstar.ca 5 Feb 03(3:28 PM) | E-mail Article to a Friend

NEW YORK (Reuters) - World oil prices rose 1 percent on Wednesday as Secretary of State Colin Powell at the United Nations sought to convince the world of the need for war to disarm Middle East oil producer Iraq.

Further strength came from a U.S. government report showing a steep fall in stocks of heating oil, as freezing temperatures stoked demand and fuel distributors began to hoard supplies ahead of possible war.

U.S. light crude rose 40 cents to $33.98 a barrel, still $1.20 below two-year highs struck last month. In London, benchmark Brent crude for March delivery rose 27 cents to $31.36 a barrel.

Heating oil futures hit $1 a gallon for the first time since December 2000, while gasoline futures rose to their highest level in 20 months.

The U.S. has vowed to disarm Iraq, the world's eighth biggest oil exporter, by force if necessary. Traders fear this could disrupt supplies from other producers in the Middle East, which pumps a third of the world's crude. Oil prices have risen 35 percent since November.

Presenting U.S. intelligence from spy satellites, telephone intercepts and Iraqi defectors, Powell argued that Iraq had concealed equipment from its suspected weapons programs to flout the U.N. inspectors searching the country for evidence of chemical, biological and nuclear arms.

France's foreign minister called on the U.N. Security Council to strengthen its inspection regime in Iraq and said military action against Baghdad should be only a final resort.

Russia's foreign minister said the U.S. information must now be verified by U.N. inspectors inside Iraq.

"I don't think that Powell was persuasive enough to convince, let's say, the French. That may lead to the U.S. having to go on its own or with a small international group," said Tim Evans, senior market analyst at IFR-Pegasus.

DEPLETED STOCKS

Prices were supported by news of a big drop in U.S. fuel stocks -- already depleted by a 65-day opposition strike in Venezuela, which normally supplies over 13 percent of U.S. crude and refined product imports.

U.S. heating oil stocks shrank 11 percent after a long cold snap in the high consumption Northeast region, a government report showed. Stocks have been depleted by cutbacks in U.S. refinery production as high crude oil prices slash plants' profit margins.

"Without the flexibility that ample inventories provide, oil markets now are as tight as a fully stretched rubber band. Whether the rubber band breaks or not will largely depend on the pace of demand in coming weeks," the EIA said.

Distillate stocks, including diesel fuel and heating oil, dropped 10.3 million barrels, the second largest weekly drop on record. Distillate fuel demand recorded the highest weekly average ever, the Energy Information Administration said.

"That's far above what was expected from weather," said Jim Ritterbusch, president of Ritterbusch and Associates in Illinois. "Distributors are stocking up in advance of a war."

Fears of a shortfall in gasoline supplies ahead of the summer vacation driving season are rising as refineries in Venezuela, normally a big gasoline supplier to the United States, remain well below capacity because of the strike.

Gasoline stocks dropped sharply too as refineries slowed operations. Stocks are now more than 5 five percent below last year.

Venezuela's crude oil supply is gradually recovering after the government succeeded in using replacement workers to restart operations. The opposition has called off strike in the non-oil sectors.

Ministers from the OPEC oil cartel have warned that as Venezuelan crude was coming back onstream, there could be a supply glut by the second quarter when demand drops off at the end of Northern Hemisphere winter. (Reporting by Andrew Mitchell; editing by Gary Crosse; Reuters Messaging: andrew.mitchell.reuters.com@reuters.net; +1 646 223 6051)