cbs.marketwatch.com

By Myra P. Saefong, CBS.MarketWatch.com Last Update: 11:01 AM ET Jan. 30, 2003

NEW YORK (CBS.MW) -- The prospect of war and falling U.S. supplies of petroleum products kept oil futures solidly above $33 a barrel Thursday. On the New York Mercantile Exchange, the March crude traded at $33.80 a barrel, up 17 cents.

Meanwhile, gold futures held above $367 an ounce with weakness in the U.S. stock market. See Metals Stocks.

The substance and tone of President Bush's State of the Union speech Tuesday night provided support to crude prices, said Michael Cavanaugh, an analyst at Peak Trading Group in Chicago. See speech highlights on CBS News.

The speech "painted a very clear picture to Saddam [Hussein]: Disarm or we are going to do it for you," Cavanaugh said.

But the comments gave the oil market a boost because there was still some uncertainty with the idea of war, he said. "There is no uncertainty anymore."

"As a result, the idea of 'buy the rumor sell the fact,' will weigh heavy selling pressure on the market if no more strong buying comes into the market," he said.

John Person, head financial analyst at Infinity Brokerage Services, disagreed.

Reports indicate that 11 out of 15 U.N. Security Council members are in support of giving more time to the U.N. weapons inspectors, he said.

This could actually indicate that there will not be a "quick resolution" to the Iraq crisis and "keeps the doubt of uninterrupted oil supplies from the Middle East to the U.S. alive in investors minds," he said.

Tightening oil products

Inventory data for crude products, which fell much more than expected, further fueled concerns over supplies.

Distillate inventories declined by 6.8 million to 122.4 million barrels during the week ended Jan. 24, the Energy Department reported Wednesday. The American Petroleum Institute said supplies fell by 7.5 million to 123.1 million barrels.

Fimat USA was looking for a fall of 5 million barrels for distillates and a rise of 1 million barrels for gasoline.

In recent dealings, February unleaded gasoline rose by 2.37 cents to 99.5 cents a gallon and February heating oil traded at 98 cents a gallon, up 0.87 cents. Both petroleum product futures climbed more than 4 percent Wednesday.

"The reality that there is an increase in consumption of by-product without the replacement of raw product had caught traders by surprise," said Person.

"Crude oil inventories are now forecasted to decline next week because of this," he said.

Crude inventories were little changed in the latest week.

Inventories fell by 500,000 barrels, the Energy Department said, but the API posted a 232,000 barrel rise. Total crude inventories stand at 273 million barrels, according to both groups.

Analysts at Fimat expected a decline of 4 million barrels in crude inventories.

Crude inventories are about 45 million barrels below their year-ago level and just above the minimum operational inventory level of 270 million barrels.

Still, Venezuela's production has been slowly climbing, with both President Hugo Chavez and striking oil workers confirming that output has climbed back above 1 million barrels per day, about one-third of normal production.

Natural gas inches up

In other energy news, March natural gas traded higher by 4.1 cents at $5.76 per million British thermal units after a weekly U.S. report revealed a bigger-than-expected decline in last week's supplies.

Natural-gas inventories fell by 247 billion cubic feet to total 1.729 trillion cubic feet in the week ended Jan. 24, the Energy Department said early Wednesday. Fimat forecast a drop of 210 billion cubic feet.

Total stocks are now 681 billion cubic feet less than last year at this time and 190 billion cubic feet below the five-year average, the report said.

Over in the equities arena, most oil service stocks traded higher. The Oil Service Index ($OSX: news, chart, profile) traded up 2.4 percent.

The Reuters/CRB Index, a broad-based measure of the commodity futures market, traded at 246.7, up 0.3 percent amid strength in crude, natural gas and gold futures. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.

foxnews.com Thursday, January 30, 2003

NEW YORK  — Exxon Mobil Corp. (XOM) on Thursday said quarterly profit rose by more than 50 percent, as sharply higher oil and gas prices helped fuel better-than-expected results.

Exxon Mobil, the world's No. 1 publicly-traded oil company, saw benchmark oil prices rise by more than 40 percent from the previous year's quarter alongside fears of a potential war in Iraq and a labor strike in Venezuela, one of the largest crude exporters in the world.

The company's fourth-quarter net income rose to $4.09 billion, or 60 cents a share, as a result, jumping 53 percent from the $2.68 billion, or 39 cents a share, it reported for the year-ago quarter.

Excluding special items, the Irving, Texas company reported earnings per share of 56 cents, or 6 cents higher than the Thomson First Call consensus estimate. Revenue jumped 18 percent to $56.21 billion.

Shares of Exxon Mobil, a component of the Dow Jones industrial average, were up 1.7 percent Thursday morning, after rising almost 10 percent during the fourth quarter.

But while the rally in oil prices lifted its exploration and production division's profit by 73 percent to $3 billion, it took a toll on the company's refining and marketing and chemicals businesses, which use crude as a key raw material.

"It was pretty clearly a strong quarter, though I don't think it's indicative of a company firing on all cylinders," said Tyler Dann, an analyst at Banc of America Securities who rates the company a "neutral" and doesn't own any shares.

"I think chemicals could clearly do better and even the downstream, you could argue, might do better down the road."

Downstream, or refining and marketing, earnings fell 19 percent to $821 million, reflecting weaker industrywide conditions.

Refiners struggled through last year as high inventories of products such as jet fuel and gasoline hurt profit margins. Companies such as Exxon Mobil, which not only produce oil, but refine it into products such as gasoline to be sold at retail stations, are banking on a turnaround this year.

Banc of America's Dann is one of the industry-watchers that believes the refining and marketing business may improve in 2003.

"We think that this company's leverage to that is significant, especially outside the United States," he said. "It just so happens that they have a more balanced asset portfolio between exploration and production, downstream and chemicals."

The chemicals business posted a 64 percent drop in earnings to $76 million, on worldwide margins that fell because of higher costs for oil, gas and other raw materials.

Shares of Exxon Mobil rose 56 cents, or 1.7 percent, to $34.41 in Thursday morning trade on the New York Stock Exchange.

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abcnews.go.com — By Carolyn Koo

NEW YORK (Reuters) - Exxon Mobil Corp.<XOM.N> on Thursday said quarterly profit rose by more than 50 percent as sharply higher oil and gas prices helped fuel better-than-expected results.

The hike in energy prices also lifted profit at independent oil and gas producer Apache Corp.<APA.N>, while a large charge erased the benefit of stronger commodity prices at Amerada Hess Corp.<AHC.N>, which posted a quarterly loss.

Exxon Mobil, the world's No. 1 publicly traded oil company, saw benchmark oil prices rise by more than 40 percent from a year earlier amid fears of a potential war in Iraq and as a labor strike hit Venezuela, one of the largest crude exporters in the world.

Net income jumped 53 percent to $4.09 billion, or 60 cents a share, in the fourth quarter from $2.68 billion, or 39 cents a share, a year earlier.

EXXON MOBIL TOPS ESTIMATES

Excluding special items, the Irving, Texas company reported earnings per share of 56 cents, beating the Thomson First Call consensus estimate by 6 cents.

Revenue jumped 18 percent in the fourth quarter to $56.21 billion, although revenue for the year dropped 4 percent to $204.51 billion.

Shares of Exxon Mobil, a component of the Dow Jones industrial average, were up 1 percent Thursday morning, after rising almost 10 percent during the fourth quarter.

While the rally in oil prices lifted Exxon Mobil's exploration and production division's profit by 73 percent to $3 billion, it took a toll on the refining and marketing and chemicals businesses, which use crude as a key raw material.

"It was pretty clearly a strong quarter, though I don't think it's indicative of a company firing on all cylinders," said Tyler Dann, an analyst at Banc of America Securities who rates the company a "neutral" and does not own any shares.

"I think chemicals could clearly do better and even the downstream, you could argue, might do better down the road."

REFINERS STRUGGLED

Downstream, or refining and marketing, earnings fell 19 percent to $821 million, reflecting weaker industrywide conditions.

Refiners struggled through last year as high inventories of products such as jet fuel and gasoline hurt profit margins. Companies such as Exxon Mobil, which not only produce oil, but refine it into products such as gasoline to be sold at retail stations, are banking on a turnaround this year.

Banc of America's Dann believes the refining and marketing business may improve in 2003.

"We think that this company's leverage to that is significant, especially outside the United States," he said. "It just so happens that they have a more balanced asset portfolio between exploration and production, downstream and chemicals."

The chemicals business posted a 64 percent drop in earnings to $76 million, on worldwide margins that fell because of higher costs for oil, gas and other raw materials.

PRODUCTION FLAT

Oil and gas production for the quarter was flat versus a year ago, as the contribution from new projects was wiped out by natural field declines and OPEC quota restrictions.

Houston-based Apache's quarterly profit more than doubled from a year-ago to $179.4 million, or $1.24 a share. Amerada Hess, based in New York, reported a loss of $371 million, or $4.20 a share, reversing a prior-year profit, because of the write-down of a key oilfield in Equatorial Guinea.

Shares of Exxon Mobil rose 35 cents, or 1 percent, to $34.20 in Thursday morning trade on the New York Stock Exchange. Meanwhile, shares of Apache were up 64 cents, or 1 percent, to $61.38 and shares of Amerada Hess dropped $3.96. or more than 7 percent, to $52.32.

money.cnn.com 30, 2003: 7:02 AM EST

Energy Information Administration sees average price of at least $1.50 a gallon as stockpiles drop.

NEW YORK (Dow Jones Newswires) - Crimped by high oil prices and declining crude inventories, refiners are likely to hold off stockpiling gasoline for the spring, and that could result in sharply higher prices at the pump during the busy summer-driving season, Thursday's Wall Street Journal reported.

Gasoline prices already have been climbing, pushed upward by the rising price of crude oil. The U.S. average retail price of a gallon of regular unleaded gasoline has risen 8% since early December to $1.47 as of Monday, and prices are expected to go even higher. The Energy Information Administration, the statistical arm of the Department of Energy, predicts an average price of at least $1.50 a gallon in February, a 40-cent-a-gallon jump above the same period last year, and of $1.54 a gallon by midspring.

Those forecasts don't take into account a possible war in Iraq and a subsequent disruption of oil from that Middle East country. A cold February, too, could result in refiners making more heating oil at the expense of gasoline.

The worrisome outlook comes as a strike in Venezuela, aimed at forcing President Hugo Chavez from office, has depleted U.S. crude-oil stocks about 5% since December to 273.8 million barrels. The EIA considers that " very low " -- 11% below the five-year average for this time of year.

Low crude-oil stocks have begun impacting gasoline production. Although nationwide inventories of gasoline are at 216.3 million barrels, about the same as a year ago, the EIA reported that the amount of crude run through U.S. refineries dropped last week by about 400,000 barrels a day to 14.6 million barrels a day, the lowest level since October.

Wall Street Journal Staff Reporters Thaddeus Herrick and Alexei Barrionuevo contributed to this article.

www.forbes.com Reuters, 01.30.03, 6:47 AM ET OPEC    

DOHA, Jan 30 (Reuters) - OPEC President Abdullah al-Attiyah said again on Thursday that the oil producers' group had done all it could to control world crude prices driven higher by war fever. Attiyah, also oil minister of Qatar, said the Organisation of the Petroleum Exporting Countries was pumping more than enough but the extra barrels could not negate the effect of the war threat on prices. "We are all concerned that high prices will harm the consumer and ultimately world economic growth. But there is nothing that OPEC can do about it," Attiyah told Reuters. "OPEC has no magic wand to solve the political problems and stop the rise in price." The threat of war in the Gulf region that supplies 40 percent of world crude exports and a strike that has cut oil supplies from Venezuela for nearly two months have pushed prices well beyond $30 a barrel. The OPEC President said the exporters' group had done its duty to keep global markets well supplied. "We as OPEC checked with all our customers whether they felt the shortage and whether they needed extra cargoes. The answer was no," he said. "Actually there is more oil in the market than the demand." Attiyah's concerns were shared by influential Saudi Oil Minister Ali al-Naimi and OPEC Secretary-General Alvaro Silva last weekend at the World Economic Forum in Davos. The cartel agreed earlier this month to raise output by 1.5 million barrels per day (bpd) from February to cover the supply gap left by strike-bound OPEC member Venezuela. Attiyah and others in OPEC are concerned that prices could deflate quickly if Venezuelan exports are restarted and an anticipated assault on Iraq only cuts supplies briefly. The OPEC chief has warned that markets could be flooded with oil when the arrival of warmer weather in the northern hemisphere cuts demand just as the group has raised supply. OPEC is due to meet on March 11 to review its output levels.