Oil near 2-year highs as Venezuela strike goes on
Reuters, 12.26.02, 10:21 PM ET
SINGAPORE, Dec 27 (Reuters) - Oil prices hovered just below two-year highs on Friday as a four-week-old strike in Venezuela showed no signs of resolution, leaving petroleum supplies from the world's fifth-biggest exporter at a trickle.
Benchmark U.S. light crude traded five cents up at $32.54 a barrel, 19 cents off the day's peak at $32.73, the highest level since December 2000.
London's International Petroleum Exchange, which trades Brent crude futures, will reopen for electronic trading at 0800 GMT following a two- day holiday for Christmas. Brent closed at $29.61 a barrel on Tuesday.
Thousands of demonstrators took to the streets in Caracas on Thursday, demanding President Hugo Chavez step down and call immediate elections.
The opposition-led strike, which began on December 2, has squeezed Venezuela's overseas oil sales to about 200,000 barrels per day (bpd) versus 2.7 million in November.
Against criticism from protestors, Brazil has begun shipping gasoline to its neighbour to plug domestic shortages at the pump because of production stoppages at Venezuelan refineries.
Many managers and executives in state oil firm Petroleos de Venezuela, as well as oilfield and refinery labourers, tanker captains, pilots and dock crews have joined the dispute.
"We will return to work when we achieve our objectives, specifically the departure of Hugo Chavez and a call for elections," said a resolution overwhelmingly approved by PDVSA employees meeting on Thursday.
The prospect of a prolonged disruption to Venezuelan supplies and fears of war in Iraq early next year have pushed world crude prices up more than $5 a barrel in December, bringing gains since the start of the year to more than $12, or 60 percent.
The Venezuelan outages have yet to show up in the United States, where fuel stocks rose last week despite 13 percent of oil imports coming from the Latin American nation.
Crude's gains have been underpinned by a U.S. and British military buildup in the Middle East Gulf as time runs out for Iraq to comply with U.N. demands to disarm.
Traders are worried the Venezuelan strike could coincide with a loss of Iraq's supplies if the United States launches an assault against Baghdad.
That would remove exports of some 4.5 million bpd from the 76 million bpd world market and stretch spare OPEC capacity, held mostly by Saudi Arabia, to the limit.
Iraq exports roughly two million bpd of crude oil, and is the sixth-largest supplier to the United States.
A January 27 briefing by U.N. arms inspectors to the United Nations Security Council is widely seen as the next event that could trigger an attack.
The OPEC producers' cartel has pledged to step in and fill any supply shortfall due to the Venezuelan strike, but so far officials have said there has not been any signs of a shortage.
Copyright 2002, Reuters News Service
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