12/17 00:36 Crude Oil May Add to Gains as Venezuela Strike Cuts U.S. Supply By Rajat Bhattacharya
Tokyo, Dec. 17 (Bloomberg) -- Crude oil may extend gains, after surging above $30 a barrel to a two-month high, as a national strike in Venezuela reduces shipments from the fourth- biggest supplier of oil to the U.S., analysts said.
U.S. crude-oil inventories probably fell between 1.1 million and 1.7 million barrels last week from 283.8 million barrels the previous week because of the Venezuelan strike, according to a Bloomberg survey of seven oil analysts. The American Petroleum Institute will release its report on U.S. inventories today.
``The Venezuelan troubles will be reflected in (the) API report,'' said Marshall Steeves, an analyst with Refco Group Ltd. in New York. ``There is no end in sight so in coming weeks the report will continue to show declines.''
Crude oil for January delivery rose as much as 23 cents, or 0.8 percent, to $30.33 a barrel, and traded at $30.08 at 2:33 p.m. Tokyo time in after-hours electronic trading on the New York Mercantile Exchange. In yesterday's floor trading, the contract added $1.66 to $30.10 a barrel, the highest closing price since Oct. 2 and the biggest daily gain since Jan. 4. Oil futures are up 57 percent from a year ago.
Strikers demanding President Hugo Chavez resign blocked highways and streets as the protests entered their third week. Police used tear gas to disperse crowds in Caracas, while Venezuela's army chief of staff General Julio Garcia Montoya appealed to strikers to end their protest. About 9 percent of the oil used in the U.S. is normally supplied by Venezuela.
``The conflict is intensifying,'' said Tom Bentz, an oil broker at BNP Paribas Futures Inc. in New York. ``Chavez shows no sign of intending to resign, and the strikers aren't backing down either. Meanwhile, exports are nil.''
Before the strike began Dec. 2, Venezuela was exporting about 2.4 million barrels of oil a day, half to the U.S. Strikers said just two oil tankers left Venezuelan ports last week. Normally, 12 to 14 tankers depart daily.
One tanker left Venezuela for the U.S. today, Globovision television reported. Chavez said over the weekend that four tankers with 2 million barrels had departed.
``The problem is that the production lost cannot be easily made up,'' said Simon Games-Thomas, an independent energy analyst in Sydney, in a report. ``Production losses will be translated into inventory losses.''
Digging In
Chavez said that he won't be pressured into quitting, and he threatened to fire workers who don't return to their jobs.
``Chavez is digging in his heels,'' said Phil Flynn, a senior energy trader at Alaron Trading Corp. in Chicago. ``The uprising is occurring when the U.S. already has tight supplies. The impact will be felt here soon.''
Oil inventories in the U.S were below year-earlier levels before the strike began. Crude-oil supplies fell 274,000 barrels to 287.1 million barrels in the week ended Dec. 6, the American Petroleum Institute said last week. Supplies were down 7.8 percent from a year earlier.
World demand for crude oil is highest during the cold-weather months in the Northern Hemisphere, when refiners boost heating oil production.
Distillate fuel inventories, which include heating oil and diesel, were 11 percent lower than a year earlier, according to the industry report released last week. Gasoline supplies were down 2.6 percent from a year ago.
The institute's report on U.S. petroleum inventories, production and imports during the week ended Dec. 13 is scheduled for release later today at about 4:30 p.m. New York time.
Venezuela, the only member of the Organization of Petroleum Exporting Countries in the Western Hemisphere, was expected to be a reliable source of oil at a time when Persian Gulf supplies are at risk because of a possible U.S. attack on Iraq. Producers in the Persian Gulf region pump about a quarter of the world's oil.
U.S. President George W. Bush has threatened to use military force to oust Iraqi President Saddam Hussein if he doesn't comply with United Nations demands to disarm. The UN weapons inspectors are in Iraq searching for evidence of Iraqi chemical, biological and nuclear arms programs.
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