By Myra P. Saefong, CBS.MarketWatch.com Last Update: 4:16 PM ET March 14, 2003

NEW YORK (CBS.MW) -- Crude-oil futures fell briefly under $34 to their lowest level in nearly five weeks Friday with President Bush appearing to lean more toward diplomacy than an immediate war with Iraq.

The Bush administration has also indicated a willingness to release oil from the nation's reserves.

"Oil is going down [and] oil will keep going down until a war occurs," said Michael Cavanaugh, an analyst at Peak Trading Group in Chicago.

Most of the rise in oil prices these past months have been an emotional rally based on the fear of a war, but now that the U.N. is "taking a stand, and pushing the U.S. war effort back, the oil market is trading lower, and will continue to do so until the U.S. makes its move," he said. Cavanaugh expects oil prices to drop to the low $30s "soon."

The start of a war will likely trigger a quick rally, he said, but "once the smoke clears, the oil will drop again."

On Friday, crude for April delivery on the New York Mercantile Exchange traded as low as $33.85 a barrel, a level not seen since Feb. 11.

It recovered a bit to close at $35.38 a barrel, down 63 cents with officials from the U.S., Britain and Spain set to meet Sunday in an attempt to salvage a war resolution that authorizes military force against Iraq to disarm. See Special Report: Countdown to War.

The meeting will likely "result in a final deadline and end the suspense on the disarmament issue with Iraq," said John Person, head financial analyst at Infinity Brokerage Services. "Either Saddam will give up or America will lead an assault by next week."

Chile proposed a new plan for the U.N. Friday that sets five disarmament conditions for Iraq to meet within three weeks, but doesn't include a trigger for war. The White House immediately rejected the proposal.

Negotiations for the surrender of some Iraqi military units were under way, CNN reported Thursday -- raising the notion that even if war does surface, it could be a quick win for the forces allied against Iraq.

With the notion that the U.S. intelligence agencies have possibly brokered a deal with top Iraqi military commanders, "odds now favor a quick decisive end to a military operation in Iraq, if that is the course of action that is taken," said Person.

As the Iraq-related news continues to flow, "every comment from New York, Washington and Baghdad will be deconstructed by traders looking to see if war is imminent, as it is now pretty much of a day-to-day threat," said Michael Lynch, president of Winchester, Mass.-based Strategic Energy & Economic Research (SEER).

In other news Friday, Bush delayed the release of his "road map" for Middle East peace until a credible prime minister is installed as a balance against Palestinian leader Yasser Arafat.

Supply side comments

Also pressuring oil prices were reports that U.S. Energy Secretary Spencer Abraham was more open to releasing oil from the Strategic Petroleum Reserve (SPR).

Abraham was quoted as saying the U.S. has a "unilateral right" to use the SPR, according to Phil Flynn, a senior analyst at Alaron Trading in Chicago. His reported comments indicated that more oil could be placed back into the market soon.

Reuters also reported that the Saudis have committed to 29.5 million barrels to the U.S. Gulf for May delivery.

Still, traders realized that even with the reports that Saudi Arabia was shipping "huge super cargos of oil to the U.S. ports, that will not relieve the immediate supply concerns for another 35 days or more," said Infinity's Person. And "until the supplies are here, anything could happen including a change of heart."

In Budapest Friday, Abraham said he remains confident that OPEC members will cover potential disruption to Iraqi crude supplies.

"I have all the confidence that they (OPEC) are sincere in their commitment," Abraham said according to Dow Jones. "If a severe supply reduction occurs... we have producers who have committed to come forward and step up production."

On Tuesday, OPEC decided to leave unchanged its members' aggregate production limit, excluding Iraq, at 24.5 million barrels. But some members, particularly OPEC heavyweight Saudi Arabia, have hinted broadly at a possible output hike in the event of war. See full story.

Also this week, the Energy Department and the American Petroleum Institute both reported sizable declines in the nation's weekly crude and gasoline inventories, along with mixed data on distillate supplies.

Crude inventories are now nearly 18 percent below the year-ago level, the government report, while gasoline stocks 7 percent below its year-ago level. See full story.

Retail gasoline prices continue higher

Prices for gasoline on the retail level continued to climb Friday, despite a second session of declines for the fuel's futures price.

The April gasoline contract fell by 1.73 cents to $1.0404 a gallon in recent action on Nymex.

But at the retail level, gasoline prices averaged $1.715 a gallon, up from $1.239 a year earlier and just short of the all-time high of $1.718 seen in May 2001, according to AAA's Daily Fuel Gauge Report.

In California, average price for regular gasoline was $2.142 -- the highest in the nation.

Heating oil cool off

Also on Nymex, heating-oil futures traded lower with forecasts calling for above-normal temperatures in the eastern half of the nation. Natural-gas prices, however, etched out a modest gain.

Heating oil traded well under $1 a gallon to hit a low at 91.7 cents a gallon, the lowest since Feb. 5. It closed at 94.07 cents a gallon, down 2.64 cents.

April natural gas rose 6.8 cents to close at $5.429 per million British thermal units after an intraday low at $5.08 -- the lowest since Jan. 29. On Thursday, it dropped nearly 9 percent.

"Inventories are very tight, but the heating season is almost over, said SEER's Lynch. "This makes the weather -- which is always uncertain -- of unusual importance."

Early Thursday, the Energy Department said natural-gas supplies fell by 117 billion cubic feet during the week ended March 7. Analysts at Fimat were looking for a decline of 143 billion cubic feet.

Total stocks of 721 billion cubic feet are 1.01 trillion cubic feet below the year-ago level and 655 billion cubic feet lower than the five-year average.

The Energy Department also reported Wednesday that distillates, which include heating oil, rose by 1.8 million barrels to stand at 98.3 million barrels. Despite the gain, this was still 23.6 percent below their year-ago level.

Meanwhile, gold for April delivery climbed 60 cents to close at $336.60 an ounce after losing nearly $11 a day earlier. See Metals Stocks.

In the equities arena, oil-services companies ended the session lower, with the Philadelphia Oil Service Index ($OSX: news, chart, profile) chalking up a loss of 0.4 percent. See Energy Stocks.

And the Reuters/CRB Index -- a broad-based measure of the commodity futures market -- closed at 240, down 0.1 percent, amid weakness in energy futures. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.

www.fuelcelltoday.com 13 March 2003 Author: Anonymous Provider: World Refining Originally Published:20021201.

Air Products has signed an agreement to supply the ConocoPhillips Lake Charles, La., refinery with hydrogen. To support ConocoPhillips, and perhaps other refiners in the area, Air Products will build and operate a new hydrogen facility in Lake Charles, with a capacity in excess of 100 million standard cubic feet per day.

Air Products already has signed another long-term hydrogen supply agreement with a major Lake Charles-area refinery. To serve the two customers, Air Products will link its new facility to its existing hydrogen pipeline network, which serves about 40 clients.

To meet ConocoPhillips' hydrogen requirements, pipeline shipments will commence prior to the end of 2002, with the anticipated startup of the new hydrogen production facility by mid-2004. "This supply arrangement is one of over 20 that the company has undertaken for refiners worldwide within the past 10 years," said Jeff Byrne, Air Products' regional vice president for chemical and process industries in North America.

The ConocoPhillips Lake Charles refinery has a capacity of 250,000 bpd, and it processes both heavy high-sulfur crude (mainly from Venezuela and Mexico) and low-sulfur crude. The refinery also produces a full range of fuel products and the feedstock for Excel Paralubes, ConocoPhillips' joint-venture facility that produces high-quality lubricating base oils, representing approximately 10% of U.S. lubricating base oil production.

The new hydrogen facility, a natural gas-based hydrogen steam methane reformer, will be the 19th to be built through the Air Products and Technip-- Coflexip Group Alliance. Technip-Coflexip provides the design and construction expertise for steam methane reformers. Air Products provides the gas cleanup technology and, through its operating network, brings operational and engineering knowledge to "design in" high reliability and efficiency, and then operates and maintains the facilities for customers under long-term agreements.

(C) 2002 World Refining. via ProQuest Information and Learning Company; All Rights Reserved

www.nytimes.com By BLOOMBERG NEWS

WASHINGTON, March 13 — Retail sales fell 1.6 percent last month, the most since November 2001, the Commerce Department reported today, as snowstorms, terrorism concerns and a bleak job market curbed Americans' interest in buying furniture and cars.

The drop was roughly three times the 0.5 percent decline economists had expected and came after a revised 0.3 percent increase in January.

"It's somewhere between bad and dismal," said Cary Leahey, senior economist at Deutsche Bank Securities in New York.

Indeed, there was reason to worry about jobs. Initial claims for jobless benefits have remained above the 400,000 level since the week of Feb. 14, the Labor Department said today. States received 420,000 applications for benefits in the week ended Saturday. That was down from the previous week's 435,000, which was the highest since mid-December. The less volatile four-week moving average of claims rose to 419,750, the highest this year.

"While the latest reading does little to disagree with the view that the labor market remains extremely weak, it offers the hope that things are not deteriorating further," said Anthony Chan, chief economist at Banc One Investment Advisers and one of the forecasters who correctly predicted the claims data.

The number of workers continuing to receive jobless benefits rose 14,000, to 3.496 million, in the week ended March 1, the highest since mid-November.

Consumer sales were reduced by the Northeast and mid-Atlantic blizzard last month that closed stores. Lackluster consumer spending would make any acceleration in growth difficult as such purchases account for a majority of economic activity.

The Commerce Department said that retail sales, excluding volatile automobile sales, fell 1 percent last month, the largest drop since the attacks of September 2001. Sales totaled $304 billion, and without autos, $232.5 billion. Both results were below forecasts.

Gasoline service station revenue increased 2.7 percent in February after a 3.8 percent rise the month before, reflecting the higher price of crude oil. The average price of all grades of gasoline at the pump rose as high as $1.70 a gallon in February, up from January's high of $1.52 and up 35 percent from $1.26 a year earlier. In the week ended March 10, the average price rose to a record $1.752 a gallon.

The surge in the cost of oil pushed up prices of goods imported into the United States for a third consecutive month in February, a separate Labor Department report said today. The import price index increased 1.3 percent after rising 1.6 percent in January, the most in nine months. Excluding petroleum, the index increased 0.4 percent, the most since April, after rising 0.3 percent.

The threat of war in Iraq and a strike in Venezuela have pushed up the benchmark price of oil, with the April delivery contract on the New York Mercantile Exchange settling yesterday at $36.01 a barrel.

www.tcpalm.com By Nadia Gergis staff writer March 13, 2003

Morris Blackmon, an independent flatbed trailer operator from Texas, is being forced to spend the night in Fort Pierce.

The trucking broker he is contracted with won't pay enough, he said, to make up for the high price of diesel fuel he needs for his next pickup.

"Right now, I am going to wait for another phone call," Blackmon said in an interview this week at the Pilot truck stop. "My broker is not paying enough for me to move the truck."

With the prices of crude oil reaching a record-breaking high — Blackmon and his fellow truckers might be in for a long, bumpy road. This week, the price of a barrel of crude oil soared to more than $37 — the highest the country has seen since the Iran-Iraq War during the 1980s. Oil then reached $40 per barrel.

And the prices of crude might go even higher because of the possibility of war with Iraq, said Bill Bush, a spokesman for the American Petroleum Institute in Washington, D.C.

"It is all about supply and demand," said Bush. "We had a colder winter, so more refineries needed a greater-than-normal supply. Our supply from Venezuela was disrupted because of the strike, and we are still recovering from that."

According to the American Trucking Industry, the industry is suffering from one of highest diesel fuel price increases in the history of the United States. In Florida, diesel fuel this week hit an all-time high of $1.892 per gallon, according to AAA Auto Club South.

Because of the drastic increase, some truckers and suppliers are passing the bucks on to consumers by increasing surcharges on transported products.

"We have implemented a fuel surcharge in addition to our normal surcharge," said Jack Nicholson, treasurer of Armellini Industries, a Palm City-based trucking company.

"Unfortunately, that cost is being passed onto consumers, but we have no choice. We have to recover costs from somewhere," said Nicholson about Armellini, a floral distributor that runs 178 refrigerated tractor-trailers throughout the United States and Canada.

Armellini executives said they made the decision to tack on a 9 percent surcharge — $9 for every $100 in cargo hauled —after the company's profit margins declined sharply because of soaring diesel prices. When diesel prices were $1.15 a gallon last year, the surcharge was only 1.8 percent, Nicholson said.

"I have never seen prices this high," said Nicholson, who has been with Armellini for 25 years.

Businesses dependent upon the trucking industry also are seeing their bottom lines battered.

Laura Lewis and her husband, Bill Sellers, own Crossroads USA, a tire and trucking lube center in Fort Pierce. The couple opened the business last year, but are experiencing difficulties in maintaining a profit because oil prices are so high.

"We saw a big decline this week," Lewis said Wednesday. "Usually we do about 10 or 12 trucks a day, and we have only done two or three so far."

The ripple effects of high gas and diesel fuel prices could spread far and wide, eventually affecting retail and grocery store prices.

"For every dollar spent on freight transportation, 87 cents of that goes to trucking," said Bob Costello, chief economist at the American Trucking Institute. "If prices stay this high, we will definitely be paying more for products at the stores."

• nadia.gergis@scripps.com

www.forbes.com Reuters, 03.12.03, 5:37 PM ET NEW YORK, (Reuters) - Crude oil prices jumped about 3 percent on Wednesday as big drops in oil and gasoline inventories in the United States deepened fears about dwindling supplies as a U.S. war with Iraq neared. Weekly estimates of U.S. petroleum stocks and usage gave a solid edge to energy trading even as rumors and speculation continued to roil gold and other markets during the day. A showdown between the U.S. and U.N. opponents of a quick invasion to disarm Iraq looked set by Friday. But gold and Wall Street again disconnected from Iraq fears for a day as a rumor -- later denied -- swirled that al Qaeda leader Osama bin Laden had been captured. Gold fell and Wall Street stocks rallied on the rumor. At the New York Mercantile Exchange, oil markets had been nervously marking time this week ahead of what is seen as a final U.N. vote on Iraq before a U.S.-led attack to disarm and oust the government of Saddam Hussein. But oil prices suddenly took off again after the weekly U.S. petroleum data. Crude oil for April delivery closed $1.11 higher at $37.83 a barrel. The 12-year high of $39.99 traded on Feb. 27. Gasoline futures also rallied as sharp declines in U.S. gasoline stocks last week signaled demand was already rising ahead of the spring and summer driving seasons. April gasoline rose 1.52 cents at $1.1139 a gallon. The U.S. Energy Information Administration said on Wednesday that lower imports caused U.S. refiners to dip into crude oil stocks last week, pushing on-hand supplies down 3.8 million barrels to 269.8 million barrels. That matched the lowest level of U.S. crude stocks since 1975. Gasoline inventories fell 4.1 million barrels to 202 million, with refiners' production still biased toward heating oil. Gasoline imports were also low as Venezuela, a major supplier, hobbled by an oil workers' strike that began Dec. 2. Distillate stocks, which include heating oil, rose 1.8 million barrels last week. But tracking crude oil, April heating oil still closed 0.50 cent higher at $1.0352 a gallon. The United States was pressing for a Security Council vote by Friday on an amended resolution in which its chief ally, Britain, set out six tough new conditions for Baghdad to avoid war. A deadline for Iraq to comply could be moved from March 17 to March 21, diplomats said on Wednesday. U.S. President Bush has vowed to disarm Iraq, with or without U.N. support. There are about 250,000 American and British forces already massed in the Middle East Gulf region. With the U.N. vote stalled, the U.S. war on al Qaeda grabbed center stage. The bin Laden rumor fed investor hopes that the group which carried out the Sept. 11 attacks and threatened more may be running out of hiding places. Pakistani politician Agha Murtaza Pooya, deputy head of the small Awami Tehreek party, said he had told the Pashto language service of Iranian Radio that bin Laden was in custody. "I just said he's in custody. I didn't say where he was captured or what," he told Reuters. "I said he's in custody. And in custody of those that are chasing him." "This is absolutely unfounded and absolutely baseless," said Pakistan's Interior Minister Faisal Saleh Hayat of the rumor after Pooya's comments were carried by BBC radio. White House and U.S. officials also denied the report. But both the dollar and the Dow Jones industrial average rallied the bin Laden rumor triggered covering of "shorts" or positions sold earlier. A narrowing of the U.S. trade deficit added some extra incentive to take profits. "The Osama bin Laden story triggered some long liquidations" of currencies versus the dollar, said David Schoenthal, a managing director at Bear, Stearns in New York. "But the market is already so very heavy against the dollar that it is going to take something really significant to push the currencies higher against it," Schoenthal said. The buying in outside markets drained some demand for gold, which has been a safe haven for nervous investors. At the COMEX, April gold closed $4 lower at $346.60 an ounce. "The wide $342-360 range is still intact and will continue to offer plenty of trading opportunities until a decision is reached on Iraq," said James Moore at TheBullionDesk.com. At the Chicago Board of Trade, weather forecasts erased more drought fears for this year's wheat crop in the Plains and prices fell to new nine-month lows. "Forecasts for rain over the next week contributed to the decline, the rains are expected to move into some of the driest areas," said Shawn McCambridge at Prudential Securities. Wheat for May delivery closed below $3 a bushel for the first time since July 7, falling 3-3/4 cents at $2.99-1/4. May soybeans gave back Tuesday's gains, closing 6 cents lower at $5.65-1/2. May corn edged 1/2 cent higher at $2.35-1/2 as exporter bids at the Gulf of Mexico stayed strong.