Sun, Mar 07, 2004 - Page 10 News List

Oil prices keep climbing as tensions rise in Venezuela


New York's benchmark crude oil contract broke above US$37 a barrel Friday for the first time since the Iraq war, kicked higher by tensions in major producer Venezuela.

Light sweet crude for delivery in April leapt US$0.62 to US$37.26 a barrel at the close. Brent North Sea crude for April rose US$0.46 to finish at US$33.35.

Traders feared a repeat of last year's interruption to supplies from violence-torn Venezuela, where at least eight people have been killed and dozens injured in recent days in unrest over an official refusal to hold a referendum to recall President Hugo Chavez.

"People remember very well what happened when Venezuela went on strike," said Refco analyst Jim Still. "They are very nervous."

Traders were also unsettled by news that Venezuela's UN ambassador Milos Alcalay quit his job Thursday in protest against the Chavez government's handling of the crisis.

Venezuela is the third-biggest exporter in the OPEC, with a production quota of about 2.7 million barrels per day under new ceilings due to take effect next month.

The country accounts for 11.5 percent of OPEC's total official output and is a major supplier to the US, the world's largest oil consumer.

"The recent unrest in OPECs only Latin American member has reminded traders of the strike that began there in late 2002, crippling oil exports," analysts at the Sucden brokerage firm wrote in a note to clients.

Gasoline stockpiles also worried the market.

"People are extremely concerned at the gasoline prices at the moment because no one actually really knows the extent of the shortage," said GNI trader Lee Elliott in London.

Gasoline stores fell an estimated 1.4 million barrels to 202 million barrels last week, the US Energy Department said Wednesday.

Traders are worried about whether there will be enough motor fuel available for the US and European summer, when demand for gasoline tends to pick up sharply as motorists take to the roads for vacations.

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