Oil Falls as Venezuela Resumes Exports

Yoshie Furuhashi furuhashi.1 at osu.edu
Wed Dec 11 15:58:52 MST 2002

Oil Falls as Venezuela Resumes Exports
Wed December 11, 2002 03:18 PM ET

NEW YORK (Reuters) - Oil prices fell from six-week highs on Wednesday
as No. 5 world supplier Venezuela exported its first crude since a
general strike paralyzed oil shipments.

Sharp gains in U.S. fuel inventories to feed winter heating needs
further eased supply worries that on Tuesday pushed oil prices to
their highest level since late October.

Traders kept a close eye on signals from OPEC ministers arriving for
Thursday's meeting in Vienna, which will aim to tighten the Middle
East-dominated cartel's adherence to formal output limits.

New York crude futures fell 34 cents, or 1 percent, to $27.40 a
barrel, while Brent crude was 17 cents lower at $26.25 in London.

Prices fell as Venezuelan Oil Minister Rafael Ramirez said a total of
four oil tankers were loading or had completed loadings at ports
across the country, defying a 10-day strike by foes of President Hugo
Chavez that had stopped oil exports.

About 40 ships were still waiting at Venezuelan ports without
instructions to load. Venezuela normally supplies around 13 percent
of the U.S.'s daily oil import needs.

"We've broken the blockade which was imposed upon us in the east in
Zulia and we are dispatching oil to the whole world," Ramirez said,
adding some of the cargoes were going to the United States.

State oil company Petroleos de Venezuela SA declared force majeure on
the oil and product exports as tanker traffic ground to a halt.

Venezuelan crude oil production has in recent days been cut by
two-thirds from November's level of about 3.1 million barrels per day


Concern that the loss of Venezuelan deliveries could leave U.S.
customers scrambling for supply eased as government figures on
Wednesday showed a sharp rise in U.S. crude and refined product
inventories last week.

Stocks of gasoline and distillates, including heating oil and diesel
fuel, both rose by more than 3 million barrels in the week ended last
Friday, the Energy Information Administration (EIA) said.

Supplies swelled as refiners ran hard to meet strong demand during a
period of abnormally cold weather in the eastern United States.

U.S. crude stocks also rose, by 1.4 million barrels, a second
consecutive weekly increase, but they remain 23.5 million barrels
below the level last year at this time, the EIA said.

Venezuela's strike will loom large during OPEC's Thursday meeting,
with leading world exporter Saudi Arabia keen to restore output
discipline to combat weakening oil demand as world economic growth

Saudi Arabia is proposing to restore output discipline by eliminating
overproduction and increasing formal supply targets, made irrelevant
in recent months by chronic quota-busting.

The Organization of the Petroleum Exporting Countries now appears
more worried about a possible glut next year than the threat of the
price spike that could come if the United States launches an assault
on Iraq.

The West's energy watchdog, the International Energy Agency, said on
Wednesday accelerating Russian, U.S. and North Sea oil output growth
give OPEC less room to raise supply next year, despite booming demand
from China.


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