reuters.com Wed February 5, 2003 02:20 AM ET

SINGAPORE (Reuters) - Oil prices were firm on Wednesday waiting to see if Secretary of State Colin Powell could convince skeptics on the U.N. Security Council that Iraq is hiding weapons of mass destruction.

Powell's briefing to the Security Council, due to start at about 10:30 a.m. EST, may be the last chance for Washington to persuade many of its key allies such as France, Russia and China that Baghdad is a threat because it has hidden biological and chemical weapons.

Many Security Council members want to give weapons inspectors more time to carry out their work in Iraq, but the U.S. has said Baghdad has weeks, not months, to give up suspected arms or face a U.S.-led military campaign.

"The market remains on its toes as the path to war becomes clearer. The presentation to the U.N. Security Council will be critical to the timing of the war," said Sydney-based independent oil analyst Simon Games-Thomas.

Benchmark U.S. light crude was up eight cents at $33.66 a barrel at 0711 GMT, extending Tuesday's 82-cent gain in New York.

Powell has said he will provide "sober and compelling proof" of Iraq's concealment in his briefing, which officials said would include satellite photographs and recorded Iraqi conversations.

But Iraqi President Saddam Hussein, in remarks broadcast on Tuesday, denied Baghdad had weapons of mass destruction or links to the al Qaeda network blamed for the September 11, 2001 attacks.

"There is only one truth, and therefore I tell you as I have said on many occasions before, that Iraq has no weapons of mass destruction," he said in a rare interview in Baghdad on Sunday and aired on British television's Channel Four News.

Saddam said the United States and Britain were intent on war to control oil in the Middle East. Concern a military strike on Iraq could disrupt crude flows from the Middle East has helped keep oil bubbling above $30 a barrel for the last two months.

U.S. OIL STOCKS SEEN DOWN

Crude's 2.5 percent rally in New York on Tuesday was partly driven by expectations U.S. supplies of heating fuel and gasoline shrank last week on robust demand and a fall in refinery output because of maintenance work.

U.S. fuel stocks have been running close to historic lows as supplies all but dried up from strike-bound Venezuela, which provides about 13 percent of U.S. oil imports.

The government Energy Information Administration is due to release its weekly report on the state of U.S. inventories later on Wednesday.

A Reuters survey of six analysts on Tuesday forecast the EIA data would show a decline of 3.5 million barrels in distillate stocks, which include heating oil, and a drop of 1.7 million barrels in gasoline supplies.

Analysts said the data would show crude inventories rose by 1.5 million barrels, helped by an inflow of supplies from the Middle East and Europe and as exports picked up from Venezuela.

Venezuela's striking oil workers said on Tuesday crude output was 1.2 million barrels a day (bpd), although President Hugo Chavez, who the strikers are trying to force to resign, claimed output was fast approaching two million bpd.

At its lowest point after the strike began in December, Venezuela crude output was running at just 150,000 bpd compared with 3.1 million bpd before the strike began.

Ministers from producers' group OPEC warned this week a return of Venezuelan exports could add to a supply glut and a possible price crash in the second quarter, when demand traditionally drops off with the end of cold weather in the Northern Hemisphere.

www.chron.com Feb. 5, 2003, 12:36AM

NEW YORK -- Crude oil futures ended sharply higher Tuesday, as petroleum products rallied and traders covered short positions ahead of Secretary of State Colin Powell's appearance today at the United Nations.

On the New York Mercantile Exchange, light, sweet crude for March delivery rose 82 cents to close at $33.58 a barrel.

March heating oil rose 4.38 cents to close at 96.19 cents a gallon, while March gasoline jumped 4.38 cents to close at $1.006 a gallon.

Natural gas for February delivery fell .04 cent to settle at $5.762 per thousand cubic feet.

On London's International Petroleum Exchange, March Brent settled up 84 cents at $31.09 a barrel.

There is "anticipation that Colin Powell's presentation to the U.N. Security Council on Wednesday will bring the U.S., if not the world, one step closer to war with Iraq," said Tim Evans, an analyst at IFR Pegasus.

Powell's report to the Security Council will dominate today's headlines, but traders will also be scrutinizing weekly inventory data from the American Petroleum Institute and the Department of Energy.

For the first time in weeks, analysts are expecting the data to show a build in U.S. crude oil inventories, thanks to a surge in imports and low refinery utilization.

Most analysts surveyed by Dow Jones Newswires expect crude stocks to show an average build of 2 million barrels for the week that ended Jan. 31, as Venezuelan shipments to the United States continue to rise.

Venezuelan oil output has climbed to 1.25 million barrels a day, according to dissident staff at state monopoly Petroleos de Venezuela SA.

The increase in Venezuelan production could prompt the Organization of the Petroleum Exporting Countries to consider an output cut in March, OPEC President Abdullah bin Hamad al-Attiyah said Tuesday.

But analysts and some OPEC officials say that much will depend on whether there is a war in Iraq and how much oil production is disrupted as a result.

www.forbes.com Reuters, 02.04.03, 10:16 PM ET

SINGAPORE, Feb 5 (Reuters) - PetroChina has made its first direct sale of gasoline to the U.S. Gulf Coast, taking advantage of a squeeze in U.S. supplies due to a drop in exports from strike-bound Venezuela, traders said on Wednesday. The top Chinese oil firm has fixed a 40,000-tonne parcel of 90-octane gasoline, for early February loading, from the northeast Chinese port of Dalian to the U.S. Gulf, they said. "Chinese barrels normally move to the U.S. via traders or majors when the arbitrage window is open, but this is the first time PetroChina has sold gasoline on a delivered basis," said one trader. She said the cargo was sold to an oil major, but declined to give details. PetroChina <0857.HK> (nyse: PTR - news - people), China's second largest refiner, accounts for about 40 percent of China's total gasoline exports, which amounted to 6.12 million tonnes (51.7 million barrels) in 2002.

www.channelnewsasia.com First created : 05 February 2003 1037 hrs (SST) 0237 hrs (GMT) Last modified : 06 February 2003 0928 hrs (SST) 0128 hrs (GMT)   World oil prices rose on Tuesday as nerves tightened on the eve of Secretary of State Colin Powell's address on Iraq to the UN Security Council.

US gasoline led the price jump as the 2-month disruption to supply from strike-bound Venezuela and strong winter heating fuel demand drains US refined product inventories.Advertisement In New York, March crude futures rose 82 cents, or 2.5 percent, to US$33.58 a barrel.

Meanwhile Brent crude in London rose 84 cents to US$31.09.

Analysts said that having taken a back seat on Monday, the Iraq crisis was returning to the fore ahead of Mr Powell's address to the UN Security Council on Wednesday.

Mr Powell is expected to try to back up Washington's claim that Iraq has not been complying with a key disarmament resolution.

On Monday, he said while he will not have "smoking gun" evidence of Iraq's defiance of disarmament demands he will make a "convincing case" that Baghdad possesses banned weapons.

US oil supplies have already been tightened by a 65-day opposition strike in Venezuela, which normally supplies over 13 percent of American crude and refined product imports.

Venezuela's oil supply is gradually recovering after the government succeeded in using replacement workers to restart operations.

The opposition there has called off strike in the non-oil sectors.

news.ft.com By Carola Hoyos in London and Andy Webb-Vidal in Caracas Published: February 5 2003 4:00 | Last Updated: February 5 2003 4:00

The return of Venezuelan exports is prompting the Opec oil cartel to consider reining in crude oil production, despite the advancing beat of Washington's war drums.

Bijan Namdar Zangeneh, Iran's oil minister, said yesterday: "If we have Iraq and Venezuela sustaining production, I'm sure we will have to reduce production in the second quarter."

World oil seasonal demand usually drops 2m barrels a day in the second quarter of the year, a factor - together with Iraq and Venezuela - that Opec ministers will have to take into account when they meet to review their 24.5m b/d output quota next month.

Crude oil production from Venezuela has recovered at a faster pace than many analysts expected, following the strike by managers at Petróleos de Venezuela (PDVSA), the state oil company.

Venezuela was producing 3.2m b/d in November, and the stoppage left output as low as 150,000 b/d at one point in December.

Ali Rodriguez, head of PDVSA, said output had now reached 1.8m b/d, and "near-normal" levels would be reached by the end of February.

But there is scepticism about the current figure, and even more about the chances of PDVSA being able to raise output much above present levels in the coming weeks, due to the lack of experienced technicians for the maintenance of oil wells and facilities.

Dissident PDVSA managers, several thousand of whom have been dismissed and appear unlikely to return, say crude production currently stands at 1.2m b/d and is close to reaching a "technical ceiling" of 1.5m b/d.

Cashflow problems are likely to prevent PDVSA from carrying out vital investment to keep up capacity, particularly from its heavier oilfields, analysts say.

"We don't see them reaching 2.5m before the end of the year - it's going to ramp up quite slowly here," said Fareed Mohamedi, chief economist at PFC Energy, a Washington-based consultancy. Local oil industry sources estimate that exports currently stand at about 500,000 b/d, almost all of which is crude oil.

So far PDVSA has been using its own vessels to carry its exports, but Dow Jones news wires reported yesterday that a major international shipping company had received the green light from insurers to again load oil and products from Venezuela.

The situation within the country continues to look bleak, however.

PDVSA has so far been unable to restart its Paraguaná refinery, the world's largest, and fuel shortages, which are still acute in many parts of Venezuela, look set to continue for some time.

The government said yesterday that it would import 12m barrels of petrol to meet demand in February - enough to satisfy the country's daily consumption levels.