Doomberg's article talks about Venezuela's deputy minister's foot in mouth act:
Energy News
Thu, 8 Apr 1999, 8:03pm EDT
N.Y. Crude Falls to 2-Week Low as Producers Seen Taking Time to Make Cuts
Crude Oil Falls to 2-week Low as Cuts to Take Time (Update1)
(Updates with final prices.)
New York, April 8 (Bloomberg) -- Crude oil fell to a two-
week low amid expectations that it will be some time before
output cuts pledged by the Organization of Petroleum Exporting
Countries and other producers can be confirmed.
Oil prices have fallen for three days, dropping 6.6 percent
from a 14-month high Monday, as traders await signs producers are
honoring promises to cut world supply by another 2.7 percent,
beginning this month. A Venezuelan energy official's comment that
it will take a while for the country to meet its new production
target raised concern that all the cuts may not be made.
''They said it might take a long time to implement the cuts
and people say, 'See, look here, they're fudging,''' said Michael
Fitzpatrick, a trader at Fimat USA Inc. in New York.
Crude oil for May delivery fell 20 cents, or 1.2 percent, to
$15.83 a barrel on the New York Mercantile Exchange, the lowest
closing price since March 25. Still, prices are almost 2 percent
higher than a year ago and up 53 percent from the 12-year low in
December.
In London, May Brent crude fell 14 cents to $14.21 a barrel
on the International Petroleum Exchange.
Venezuela, OPEC's third-largest producer, said last month it
was producing at the target rate of 2.845 million barrels a day
adopted as part of an output reduction campaign last year.
Alvaro Silva Calderon, Venezuela's deputy energy and mines
minister, said Tuesday the country had begun to fulfill its
promise to cut production by another 125,000 barrels a day as
part of a global effort to boost prices that sank to a 12-year
low in December. Still, ''this process will take time,'' he said.
Venezuelan compliance is regarded as crucial to the success
of the new round of cuts, because if the country fails to honor
its pledge, other producers, particularly Saudi Arabia, would be
under pressure to export more oil to preserve market share in the
U.S. Venezuela, Saudi Arabia and Mexico are the top oil suppliers
to the U.S.
'Walking a Tightrope'
Venezuela's energy and mines Minister, Ali Rodriguez, said
the pledged cuts ''were a commitment and we are observing it.''
Venezuelan progress in making the promised reduction is
under scrutiny, because the country's new president, Hugo Chavez,
is under pressure from oil workers who want to keep their jobs.
''Chavez was the people's choice, but he didn't campaign on
lowering oil production,'' said Rich Redash, an energy futures
analyst at Prudential Securities in New York. ''He's walking a
tightrope.''
Gasoline futures also fell for a third day, dropping 2
percent, as a supply shortage on the West Coast eased.
Gasoline prices have dropped 8.5 percent since reaching an
11-month high on March 31 as refiners on the U.S. Gulf Coast
boosted production to make supplies available to West Coast
markets. Four refineries on the West Coast had outages during the
past six weeks, dropping production in the region to its lowest
level in more than three years.
May gasoline fell 0.99 cent to 49.52 cents a gallon on the
Nymex. May heating oil fell 0.43 cent, or 1 percent, to
40.84 cents a gallon.
Worst Over?
Gasoline production in California and the other states west
of the Rocky Mountains dropped to 1.072 million barrels a day
last week, down 23 percent from a year ago, according to the
American Petroleum Institute.
Tosco Corp.'s Avon refinery in Martinez, California, is
still out of service, and production at Chevron Corp.'s Richmond
refinery has been reduced by damage to a unit.
Other refinery problems have been fixed, restoring some lost
supply. And gasoline destined for other markets is being to
diverted to California, the country's biggest gasoline-consuming
state, to take advantage of pump prices that are the highest in
almost three years.
''I pulled up to a pump the other day, and it was $1.75 a
gallon for premium,'' said Steve Weitz, a broker at Bel Air
Capital, a commodity and equity trading company in Century City,
California. ''I have to think that gasoline is going much
higher.''
Others, including the U.S. Department of Energy, say the
worst may be over for the supply squeeze. Retail gasoline prices
nationwide should peak next month at $1.18 a gallon for regular
and average $1.13 during the summer, the department said
yesterday.
''The situation is not totally removed, but over the last
couple of days it's gotten better as some units go back on
line,'' Redash said.
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