<a href=economictimes.indiatimes.com>REUTERS [ WEDNESDAY, APRIL 30, 2003 11:18:22 AM ]

SINGAPORE: Oil prices traded marginally higher on Wednesday, breaking six straight days of falls that wiped more than $3 off a barrel of crude as traders awaited fresh data from the United States on the health of US fuel supplies.

US light crude climbed 18 cents to $25.42 a barrel, recovering from a five-month low of $25.18 struck on Tuesday on expectations of rising supply in a weak global economy and with the deadly SARS epidemic biting into oil demand.

London's Brent crude rose nine cents to $23.35 a barrel.

"I think at these levels, oil is becoming a good short-term buy on a risk-reward consideration. Stocks are still very low and any potential supply disruption could flick US crude back up to $26 or $27," said David Thurtell, commodities strategist at Commonwealth Bank in Sydney.

With little by way of headlines to move prices, traders will focus attention on US oil stocks data to be released by the government's Energy Information Administration (EIA) later on Wednesday.

The weekly report on inventory levels across the barrel is closely monitored by oil dealers for signs of market imbalances in the world's biggest oil consumer and for a snapshot of demand.

US fuel stocks have been running at steep deficits to year-ago levels, raising fears of a potential shortfall following disruptions to supplies from Venezuela, Nigeria and Iraq in the last six months.

Analysts polled by Reuters on Monday forecast the EIA to report a 2.85 million barrel increase in crude levels in the week to April 25 as refiners rachet up processing rates in preparation for the summer run on gasoline during the holiday season.

Analysts pegged gasoline inventories rising by 1.6 million barrels, while distillate stocks were seen up by 1.3 million barrels as demand tails off with the end of winter.

Oil prices tumbled more than $1 last Wednesday after the EIA reported an unexpectedly large nine-million-barrel jump in crude stocks on record imports, with much of the extra supply coming from OPEC producers.

SARS Threatens Oil Demand Growth

The Organization of the Petroleum Exporting Countries last week agreed to cut back less than expected of the surplus crude it pumped to cover supply during the US-led war on Iraq.

Opec raised production well beyond formal quota limits in March to keep oil prices under control ahead of war in Iraq and make up for supply disruptions from a strike in Venezuela and ethnic strife in Nigeria.

While Opec presented its deal as a cut of two million barrels per day (bpd), analysts said its threshold for the reduction was inflated, reducing the actual impact of the move.

The increased Opec supply, particularly from Saudi Arabia, has helped bring oil prices below the $30 a barrel level that analysts warn can hurt global economic growth.

Also weighing on prices, the International Energy Agency has said it may have to cut its world oil demand forecast for this year as the deadly SARS virus slashes air travel.

Opec has said it expected Severe Acute Respiratory Syndrome to hit Asian demand alone by some 300,000 bpd mainly due to declining travel. The epidemic coincides with the second quarter, when oil demand falls about two million bpd from its winter peaks.

Tue April 29, 2003 11:26 PM ET

SINGAPORE (<a href=reuters.com>Reuters) - Oil prices traded marginally higher on Wednesday, breaking six straight days of falls that wiped more than $3 off a barrel of crude as traders awaited fresh data from the United States on the health of U.S. fuel supplies.

U.S. light crude CLc1 climbed 18 cents to $25.42 a barrel, recovering from a five-month low of $25.18 struck on Tuesday on expectations of rising supply in a weak global economy and with the deadly SARS epidemic biting into oil demand.

London's Brent crude LCOc1 rose nine cents to $23.35 a barrel.

"I think at these levels, oil is becoming a good short-term buy on a risk-reward consideration. Stocks are still very low and any potential supply disruption could flick U.S. crude back up to $26 or $27," said David Thurtell, commodities strategist at Commonwealth Bank in Sydney.

With little by way of headlines to move prices, traders will focus attention on U.S. oil stocks data to be released by the government's Energy Information Administration (EIA) later on Wednesday.

The weekly report on inventory levels across the barrel is closely monitored by oil dealers for signs of market imbalances in the world's biggest oil consumer and for a snapshot of demand.

U.S. fuel stocks have been running at steep deficits to year-ago levels, raising fears of a potential shortfall following disruptions to supplies from Venezuela, Nigeria and Iraq in the last six months.

Analysts polled by Reuters on Monday forecast the EIA to report a 2.85 million barrel increase in crude levels in the week to April 25 as refiners rachet up processing rates in preparation for the summer run on gasoline during the holiday season.

Analysts pegged gasoline inventories rising by 1.6 million barrels, while distillate stocks were seen up by 1.3 million barrels as demand tails off with the end of winter.

Oil prices tumbled more than $1 last Wednesday after the EIA reported an unexpectedly large nine-million-barrel jump in crude stocks on record imports, with much of the extra supply coming from OPEC producers.

SARS THREATENS OIL DEMAND GROWTH

The Organization of the Petroleum Exporting Countries last week agreed to cut back less than expected of the surplus crude it pumped to cover supply during the U.S.-led war on Iraq.

OPEC raised production well beyond formal quota limits in March to keep oil prices under control ahead of war in Iraq and make up for supply disruptions from a strike in Venezuela and ethnic strife in Nigeria.

While OPEC presented its deal as a cut of two million barrels per day (bpd), analysts said its threshold for the reduction was inflated, reducing the actual impact of the move.

The increased OPEC supply, particularly from Saudi Arabia, has helped bring oil prices below the $30 a barrel level that analysts warn can hurt global economic growth.

Also weighing on prices, the International Energy Agency has said it may have to cut its world oil demand forecast for this year as the deadly SARS virus slashes air travel.

OPEC has said it expected Severe Acute Respiratory Syndrome to hit Asian demand alone by some 300,000 bpd mainly due to declining travel. The epidemic coincides with the second quarter, when oil demand falls about two million bpd from its winter peaks.

Reuters, 04.29.03, 11:54 AM ET By Marguerita Choy

PARIS, April 29 (Reuters) - The International Energy Agency, the West's energy watchdog, said on Tuesday industrialised countries should build emergency oil stocks further to protect against supply disruptions, even though these reserves have not been used in over a decade.

The agency, set up in 1974 to protect oil importers after the 1973 Arab embargo, requires its 26 members to hold government-controlled stocks to cover at least 90 days of demand.

"Growing oil demand in IEA Member and non-member countries, particularly in transport, requires greater effort by importing countries to build and hold appropriate emergency stocks," the agency said in a communique after two days of talks.

The call to top up these reserves, which already amount to 1.3 billion barrels in the OECD, comes after three major oil supply disruptions over the past six months -- none of which has required a stock release.

An opposition strike in Venezuela shut off some three million barrels per day (bpd) of oil supply from the world's 78 million bpd market in December.

Just as Venezuelan output recovered, Nigeria saw its exports hit by almost a million bpd in March due to ethnic clashes. Then at the end of March, Iraq's 2.5 million bpd production was halted by the U.S. led attack on Baghdad.

Relying on big volumes of spare production capacity in other OPEC nations, the IEA decided against releasing oil from its emergency stocks.

Thanks partly to a growing cooperation between OPEC and the IEA, the West's emergency stocks have not been tapped since 1991, after Iraq's invasion of Kuwait.

Nevertheless, British Energy Minister Brian Wilson said it was perverse to question the deterrent value of the reserves.

"The stocks are part of a framework that gives stability and things have worked reasonably well. We should strengthen the framework rather than dismantle it and hope for the best," Wilson told a news conference after a two-day IEA meeting in Paris.

IEA ministers strongly affirmed their readiness to combat a disruption of oil supply, including use of emergency stocks and demand restraint.

Claude Mandil, IEA executive director, added that while the agency worked with producer cartel OPEC to stabilise the market ahead of the Iraq war when oil prices soared to a 12-year high near $40 per barrel, it had been fully prepared to release strategic reserves.

"We were not willing to intervene in the market by releasing stocks if it was not necessary but we totally prepared to do so if it was," Mandil said.

"I would make the comparison with a safety net. If you're using the flying trapeze, you expect not to use but are happy to have it in case you have to use it," he said.

Houston Chronicle

ConocoPhillips, the largest U.S. oil refiner, said Wednesday that shipments from Venezuela haven't returned to normal after a December strike disrupted exports. But Venezuela has said its oil exports are normal.

The company said shipments of a grade called Merey are still low. ConocoPhillips wouldn't say whether a second grade it imports is also below normal.

"We will receive 13 shipments of Merey oil May through June," said Linsi Crain, a spokeswoman for ConocoPhillips in Houston. "We normally receive nine shipments a month."

State oil company Petroleos de Venezuela said it began honoring contracts for oil shipments from its eastern region on Feb. 25 and was able to meet all contracts on March 5.

<a href=news.independent.co.uk>news.independent.co.uk By Philip Thornton Economics Correspondent 24 April 2003

Oil prices slumped 5 per cent yesterday as record import volumes boosted US crude stocks, increasing pressure on the producers' cartel Opec to reduce production at today's emergency meeting.

The drop came as Saudi Arabia, the world's largest oil producer and an Opec member, warned of the prospect of a glut in supply and urged a cut in production quotas.

Prices slumped after the US said stocks jumped 9 million barrels, or 3 per cent, last week as crude imports hit the highest level on record at 10.6 million barrels per day.

News of rising supply in the world's biggest consumer came as Opec prepared to reduce its production ahead of the return of Iraqi crude exports to the world market.

Opec, which holds an emergency session in Vienna today, increased output to prevent a price surge during the war in Iraq, but is now trying to stop crude dropping beneath the floor of its target range of $22 (£14) to $28 a barrel. Oil prices in New York dropped $1.54 to $26.45 a barrel yesterday, the lowest level in a month and taking falls this week to $4 or nearly 13 per cent. In London Brent prices fell $1.24 to $24.22 a barrel.

Saudi Oil Minister Ali al-Naimi, said: "We are concerned if we don't take some steps, an oil glut may form. This meeting is to make sure we keep the market where it is."

Abdullah bin Hamad al-Attiyah, the Opec president, has said the surplus may be more than 2 million barrels a day – 8 per cent of the current 24.5 million quota.

Obaid bin Saif al-Nasseri of the United Arab Emirates said Opec should tackle the 1.7 million barrels that the 10 nations pump out every day on top of the quota – a position backed by Venezuela. "I think we have to tackle first compliance," he said.

Iran has called for a cut in the headline quotas as well as tightening compliance.

Iraq will not be represented at the meeting, as the US has not yet set up an interim authority to govern the country.