ogj.pennnet.com Sam Fletcher Senior Writer

HOUSTON, Feb. 3 -- Energy futures prices were mixed Friday amid signs of increased oil production in Venezuela and possible postponement of military action against Iraq.

In a radio broadcast marking his fourth anniversary in office, Venezuelan President Hugo Chávez claimed Sunday that Venezuela is now producing 1.8 million b/d of oil and 1 bcfd of natural gas. He also announced that 5,000 managers and technicians have been fired from Petroleos de Venezuela SA (PDVSA), the national oil company, up from 3,000 previously.

Conflicting reports "There are conflicting reports as to actual production levels out of the country, but Venezuela still appears to be producing 1.7-2.2 million b/d below its capacity," said Tyler Dann, a Houston-based analyst with Banc of America Securities LLC, in a report issued last week. "Some industry observers have gone as far as to estimate that 400,000 b/d of (Venezuela's) production capacity has been eliminated," he added.

"Without a comprehensive resolution of the strike (preferably with Chávez out of power), refinery start ups and field rehabilitation work will likely be difficult to comprehensively execute," said Dann. "Future capacity rehabilitation (and) growth will likely be a function of western company involvement; our argument would be that, with Chávez still in power, this would be a tough sell to those companies."

Meanwhile, the Caracas-based online news service Petroleumworld.com, published on the internet, reported Monday that 5 million Venezuelans lined up Sunday to sign petitions to remove Chávez from office. Opposition leaders also said they were scaling back the 63-day general strike, with nonoil sectors of business returning to work Monday. They said they took that action in response to international requests and to demonstrate their willingness to negotiate a means of removing Chávez.

Energy prices The March contract for benchmark US light, sweet crudes lost 34¢ to $33.51/bbl Friday on the New York Mercantile Exchange, while the April position was down 22¢ to $32.74/bbl. The expiring February contract for heating oil plunged 2.17¢ to 95.88/gal. Unleaded gasoline for the same month dropped 1.13¢ to 97.56¢/gal.

However, the March natural gas contract inched up 2.2¢ to $5.61/Mcf on NYMEX "in a day of choppy trades and short covering ahead of the weekend," said analysts at Enerfax Daily.

"The market is still being driven by the weather and will probably remain somewhat volatile on conflicting mid-range forecasts (for colder weather through mid-February)," they said. "The concern is whether or not enough gas can be put in the ground over the summer. Inventories of natural gas storage have been drawn down substantially during the past month as frigid weather covered high-consumption areas in the Northeast. Last Thursday, the Energy Information Administration reported a 247 bcf withdrawal from storage—the third largest on record. The draw brought inventories down to 1.729 tcf, compared (with) a 5-year average of 1.919 tcf. However, a flat natural gas production profile and rising demand many predicting a $4.50(/Mcf) average price for 2003."

In London, the March contract for North Sea Brent oil lost 11¢ to $31.10/bbl on the International Petroleum Exchange. But the March natural gas contract gained 1.7¢ to the equivalent $2.81/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 13¢ to $30.71/bbl Friday.

For the full week, however, the OPEC basket price averaged $30.29/bbl, down 52¢ from the previous week. So far this year, the OPEC basket price has averaged $30.34/bbl, compared with price averages of $24.36/bbl for all of 2002 and $23.12/bbl for 2001.

Contact Sam Fletcher at samf@ogjonline.com

timesofindia.indiatimes.com REUTERS[ MONDAY, FEBRUARY 03, 2003 08:30:21 PM ]

NEW DELHI: Union Petroleum Minister Ram Naik said on Monday the government planned to boost the country's strategic crude oil reserves to 45 days from 15 at an estimated cost of 43.50 billion rupees.   The statement came amid the looming threat of a U.S.-led war against Iraq, which the United States accuses of thwarting U.N. inspectors' efforts to strip Iraq of its alleged weapons of mass destruction.   "We have been asked to conduct a study by a professional agency to finalise the creation of the strategic reserves," Naik told reporters after a meeting with Prime Minister Atal Behari Vajpayee.   "We would like to have 45 days of strategic reserves," he said. "Right now, it is just 15 days and Japan has 120 days."   India has 17 refineries that can process 2.3 million bpd and imports 70 percent of its crude oil needs.   Petroleum ministry officials say India is better prepared today than it was during the Gulf War in 1991 as the country was then a big importer of diesel, which accounts for 40 percent of local demand. Now, India exports oil products and has more storage capacity.   Naik said the country was making arrangements for supplies from some other nations apart from its traditional Middle East suppliers in "case of any conflict between Iraq and the U.S". Naik did not give details.   He said the government could either impose a tax on petroleum products or give grants to oil companies to cover the cost of increasing the reserves.   Naik said the cost of maintaining the oil reserves was estimated to be about 14 billion rupees.   The prime minister has asked the petroleum ministry to accelerate the process of acquiring oil equity abroad to boost crude resources abroad, he said.   "From one country we now have oil equity in nine countries and four more are in the pipeline. The four newcountries are Venezuela, Qatar, Kazakhstan and Indonesia," Naik said.

abcnews.go.com — By Barbara Lewis

LONDON (Reuters) - Oil prices fell sharply on Monday as Venezuelan exports recovered from a supply-choking strike and after OPEC ministers warned of a glut in supplies in the second quarter when winter demand ebbs.

But the threat of a U.S.-led war on oil-producer Iraq kept crude above $30 a barrel.

In London, IPE Brent crude was trading 53 cents weaker at $30.52 a barrel, while U.S. light crude dropped 71 cents to $32.80 a barrel.

"The Venezuelan strike is clearly cracking. The question is how quickly they can ramp up production," said J.P. Morgan's Paul Horsnell.

Venezuelan President Hugo Chavez said on Sunday crude oil output had risen to nearly 1.8 million barrels per day (bpd), up from a low of 150,000 bpd after the strike began in December and more than half of the 3.1 million bpd pumped in November.

Oil strikers said production stood at 1.2 million bpd.

Data from shipping agents showed Venezuela's oil exports rose to 890,000 bpd in the week to February 1 from 550,000 bpd a week earlier, but were still only one-third of normal levels of 2.7 million bpd before the strike.

Opposition leaders, who want Chavez to resign, scaled back the nine-week action on Sunday in the non-oil sector only.

OPEC CONCERNS OVER GLUT

A return of oil sales from Venezuela, the world's fifth biggest oil exporter, could put pressure on the OPEC producers' group to rein in output.

The Organization of the Petroleum Exporting Countries agreed in January to raise official production limits by 1.5 million bpd from February 1 to offset the Venezuelan outage.

But OPEC ministers warned at the weekend that oil markets could tip into oversupply in the second quarter and trigger a price collapse.

"If Venezuela comes back (to full capacity), we could have four million bpd or more floating," said OPEC President and Qatari Oil Minister Abdullah al-Attiyah.

Non-OPEC supplies also looked robust, with output from Russia, the world's second largest exporter, hitting a post-Soviet high.

Russian Energy Ministry sources said exports via Russia's Transneft pipeline monopoly rose 200,000 bpd in January compared to December and output reached a new high of 8.07 million bpd.

But even if supplies have grown, analysts predict oil prices will not fall far until uncertainty is resolved over Iraq, which sells roughly two million bpd of crude to the world market.

Traders fear supplies might be disrupted, not just from Iraq, but from elsewhere in the oil-rich Middle East if there is a military strike against Baghdad.

"In the short term the market is stuck," said J.P. Morgan's Horsnell.

He said dealers were awaiting Secretary of State Colin Powell address to the United Nations on Wednesday when he has pledged to present "straightforward, sober and compelling" proof that Iraq is hiding banned weapons.

Writing in the Wall Street Journal, Powell said the United States sought peaceful disarmament.

"But we will not shrink from war if that is the only way to rid Iraq of its weapons of mass destruction," he wrote.

www.morningstar.ca 3 Feb 03(7:14 AM) |  E-mail Article to a Friend By Barbara Lewis

LONDON (Reuters) - Oil prices fell on Monday as Venezuelan exports recovered from a supply-choking strike and after OPEC ministers warned of a glut in supplies in the second quarter when winter demand ebbs.

But the threat of a U.S.-led war on oil-producer Iraq kept crude above $30 a barrel.

In London, IPE Brent crude was trading 38 cents weaker at $30.72 a barrel, while U.S. light crude slipped 31 cents to $33.20 a barrel.

"The Venezuelan strike is clearly cracking. The question is how quickly they can ramp up production," said J.P. Morgan's Paul Horsnell.

Venezuelan President Hugo Chavez said on Sunday crude oil output had risen to nearly 1.8 million barrels per day (bpd), up from a low of 150,000 bpd after the strike began in December and more than half of the 3.1 million bpd pumped in November.

Oil strikers said production stood at just over one million bpd and acknowledged it was rising.

Data from shipping agents showed Venezuela's oil exports rose to 890,000 bpd in the week to February 1 from 550,000 bpd a week earlier, but were still only one-third of normal levels of 2.7 million bpd before the strike.

Opposition leaders, who want Chavez to resign, scaled back the nine-week action on Sunday in the non-oil sector only.

OPEC CONCERNS OVER GLUT

A return of oil sales from Venezuela, the world's fifth biggest oil exporter, could put pressure on the OPEC producers' group to rein in output.

The Organization of the Petroleum Exporting Countries agreed in January to raise official production limits by 1.5 million bpd from February 1 to offset the Venezuelan outage.

But OPEC ministers warned at the weekend that oil markets could tip into oversupply in the second quarter and trigger a price collapse.

"If Venezuela comes back (to full capacity), we could have four million bpd or more floating," said OPEC President and Qatari Oil Minister Abdullah al-Attiyah.

Non-OPEC supplies also looked robust, with output from Russia, the world's second largest exporter, hitting a post-Soviet high.

Russian Energy Ministry sources said exports via Russia's Transneft pipeline monopoly rose 200,000 bpd in January compared to December and output reached a new high of 8.07 million bpd.

But even if supplies have grown, analysts predict oil prices will not fall far until uncertainty is resolved over Iraq, which sells roughly two million bpd of crude to the world market.

Traders fear supplies might be disrupted, not just from Iraq, but from elsewhere in the oil-rich Middle East if there is a military strike against Baghdad.

"I think the market risks translate into a few dollars to the downside and over $10 upside at the moment," said Sydney-based independent oil analyst Simon Games-Thomas.

"In the short term the market is stuck," said J.P. Morgan's Horsnell.

He said dealers were awaiting Secretary of State Colin Powell address to the United Nations on Wednesday when he has pledged to present "straightforward, sober and compelling" proof that Iraq is hiding banned weapons.

Writing in the Wall Street Journal, Powell said the United States sought peaceful disarmament.

"But we will not shrink from war if that is the only way to rid Iraq of its weapons of mass destruction," he wrote.

www.news24.com 03/02/2003 09:09  - (SA)   Tanya Pang

Singapore - Oil prices fell for the third day in a row on Monday as Venezuela continued to bump up vital petroleum exports, while key Opec ministers warned of a possible glut in supplies in the second quarter when winter demand ebbs.

But the threat of war in Iraq, the world's eighth-biggest oil exporter, continued to keep crude well above US$30 a barrel and within $2 of a 26-month high over $35 touched in January.

US light crude slipped US30c to $33.21 a barrel, 0.9% down from Friday's settlement in New York, when it lost 34c.

Venezuelan President Hugo Chavez said on Sunday that crude production had increased to nearly 1.8 million barrels per day, up from a low of 150 000 bpd after the strike began in December and more than half of the 3.1 million bpd pumped in November.

Oil strikers say current output stands at just over one million bpd, although they acknowledge it is rising.

Data from shipping agents showed Venezuela's oil exports higher at 890 000 bpd in the week to February 1, up from 550 000 bpd a week earlier but only one-third of normal levels of 2.7 million bpd before the strike.

Opposition leaders, who want Chavez to resign, scaled back the nine-week action on Sunday in the non-oil sector only. The strike continues in the oil sector.

A return of oil sales from Venezuela, the world's fifth-biggest oil exporter, could put some pressure on the Opec producers' group to rein in output.

The Organisation of the Petroleum Exprting Countires agreed in January to raise official production limits by 1.5 million bpd on February 1 to offset the Venezuelan outage.

Opec ministers warned at the weekend that oil markets could tip into oversupply in the second quarter with warmer weather in the Northern Hemeisphere and spark a price collapse.

Opec is due to meet again in Vienna on March 11.

Iraq still wildcard

Even if Venezuelan oil exports return to normal levels soon, analysts see little chance of a big fall in oil prices until uncertainty over war in Iraq is cleared up.

Commonwealth Bank's Thurtell said US crude may head down to $30 or $31 a barrel once the strike in Venezuela was resolved.

Iraq sells roughly two million bpd of crude to the world market and traders fear supplies may be shut off if there were a military strike against Baghdad, which has threatened to retaliate against neighbouring oil exporter Kuwait where hundreds of US troops are based.

US Secretary of State Colin Powell is due to present to the UN security Council on Wednesday evidence that Iraq has been operating programmes to build banned weapons.

Top UN disarmament officials Hans Blix and Mohamed ElBaradei are expected to return to Baghdad at the end of the week as part of last-ditch efforts to secure Iraqi compliance with UN resolutions.

US President George W Bush has vowed to disarm Iraq of weapons of mass destruction it claims Baghdad has stocked, with or without backing from the international community.