Crude Oil Rises to 23-Month High as Venezuela Strike in 4th WkBy Joe Carroll
New York, Dec. 23 (Bloomberg) -- Crude oil rose to a 23-month high as a strike that crippled petroleum exports from Venezuela entered its fourth week, forcing refiners to seek alternative supplies.
Venezuelan crude production has dropped more than 90 percent since oil workers walked off the job Dec. 2, traders said. OPEC ministers have no immediate plans to boost output to cover the lost supply. Traders are also concerned the U.S. and Iraq may go to war and disrupt Persian Gulf crude shipments.
Refiners ``are scrambling to buy anything they can,'' said Bill Scott, a crude-oil trader at Burlington Resources Trading Inc. in Houston. ``People are concerned about having enough crude supplies to keep refineries running into January and February.''
Crude oil for February delivery rose $1.45, or 4.8 percent, to $31.75 a barrel on the New York Mercantile Exchange, the highest closing price since January 2001. Crude has gained 17 percent since the strike began.
Oil prices are up 60 percent this year, on pace for the biggest yearly gain since 1999. That's partly because of concern the U.S. and U.K. will try to disarm Iraq by force, traders said. A military conflict might damage oilfields in neighboring countries or disrupt shipping, crimping access to the Persian Gulf, which supplies a quarter of the world's oil.
In London, Brent crude for February settlement rose $1.38, or 4.9 percent, to $29.72 a barrel on the International Petroleum Exchange. Brent, a benchmark for two-thirds of the world's oil, has risen 54 percent in the past year.
Chavez Threatens Workers
Venezuela began loading the tanker Teseo at the Puerto La Cruz terminal as President Hugo Chavez stepped up threats to fire striking oil workers and sue them for lost revenue. The Teseo, which is contracted to Petroleos de Venezuela, will be the sixth tanker to leave the country since the strike.
U.S. Representative Billy Tauzin asked the Energy Department to tap the Strategic Petroleum Reserve to prevent two Gulf Coast refiners owned by Citgo Petroleum Corp. from running out of oil, according to a letter to Energy Secretary Spencer Abraham released by his office.
The Energy Department last week allowed five companies to postpone repayment of 7.8 million barrels of oil to September 2003. An Energy Department spokesman said he hadn't seen Tauzin's request and declined to comment.
Venezuela exported 2.4 million barrels of oil a day before the walkout. Opposition groups called the strike to force Chavez to step down or hold early elections.
Crude Stockpiles Lower
U.S. crude stockpiles fell 1.1 percent in the week ended Dec. 13, according to the American Petroleum Institute. A steeper decline is expected to be reflected when the industry-funded group releases updated figures tomorrow after Nymex floor-trading ends, traders said.
The walkout by 40,000 Venezuelan petroleum-industry workers also reduced gasoline exports, cutting off the U.S. from its third- largest supplier of the fuel, traders said. Gasoline futures surged to an 18-month high of 91.86 cents a gallon at the New York exchange, and are up 23 percent since the strike began.
Venezuela accounts for 13 percent of U.S. crude supplies and 9 percent of the nation's gasoline, according to the U.S. Energy Department.
Refiners in the U.S. and the Caribbean that relied on Venezuelan crude are running out of stored oil, boosting demand for similar types of high-sulfur crude produced in the U.S., Mexico and Canada, traders said.
Bonito Sour crude, a high-sulfur oil from Louisiana that competes with Venezuelan supplies, rose 5 cents to $29.95 a barrel, after earlier reaching a two-year high of $30.42, according to Bloomberg data.
OPEC: No Shortage
The Organization of Petroleum Exporting Countries, which has three-quarters of the world's spare oil capacity, hasn't any immediate plans to increase output to make up for lost Venezuelan supplies, oil ministers from Saudi Arabia and Qatar said over the weekend.
Prices haven't risen high enough for long enough to indicate global crude supplies are short, Saudi Oil Minister Ali al-Naimi said at a meeting of the Organization of Arab Petroleum Exporting Countries in Cairo.
Even if OPEC decides to boost output, it could take two months for North American refiners to benefit, analysts said. Persian Gulf cargoes take six to eight weeks to reach the U.S., compared with one week from Venezuela.
Oil prices are also higher because of concern that the U.S. and U.K. are girding for a war with Iraq that might disrupt shipments from the Persian Gulf, source of a quarter of the world's crude, traders said.
Hans Blix, the United Nation's chief weapons inspector, said last week that a 12,000-page Iraqi report doesn't explain what happened to some chemical weapons and delivery systems discovered by UN inspectors before 1998, when an earlier mission pulled out. Iraq said it has nothing to add to the Dec. 8 report.
Nymex floor-trading closes at 1 p.m. local time tomorrow and is closed Wednesday in observance of the Christmas holiday.
