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 Business News | March 2008 
Oil Declines as Tensions Ease in Venezuela, Mexico Opens Ports
 Grant Smith - Bloomberg
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Crude oil fell after Venezuela recalled troops from its Colombian border, allaying concerns of a regional conflict, and Mexico opened oil ports shut by storms.
Venezuela, the fifth-biggest supplier in the Organization of Petroleum Exporting Countries, had dispatched 10 armored battalions on March 2 after Colombia struck a guerilla leader based in Ecuador. Petroleos Mexicanos, the state-owned oil company, reopened terminals in the Gulf of Mexico after closing them on March 7 because of heavy rain and winds.
"We're seeing the fall out between Ecuador, Venezuela and Colombia healed as a temporary truce emerges, while it's also likely shipments from Mexico will resume later today," said Rob Laughlin, senior broker at MF Global Ltd. in London. "This is happening against the bigger picture of the ailing U.S. economy, where recession fears continue to mount."
Crude oil for April delivery fell as much as 79 cents, or 0.8 percent, to $104.36 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $104.42 a barrel at 11:39 a.m. London time.
On March 7, the contract rose to a record $106.54 a barrel before settling at $105.15 a barrel. Prices have gained 74 percent in the past year.
The border tensions, which led Venezuela and Ecuador to break diplomatic relations with Colombia, raised concerns of a regional war among the three oil-exporting countries. That helped push oil prices to a record $106.54 a barrel March 7.
Brent Oil
Brent crude oil for April settlement fell as much as 85 cents, or 0.9 percent, to $101.53 a barrel on London's ICE Futures Europe exchange. The contract traded $101.65 at 11:40 a.m. in London. The contract fell on March 7 by 23 cents to close at $102.38 after earlier reaching a record $103.98 a barrel.
Petroleos Mexicanos, called Pemex, reopened terminals at the ports of Dos Bocas, Cayo Arcas and Pajaritos, according to the Web site of Mexico's Merchant Marine. The three terminals ship about 80 percent of the oil Mexico exports.
Pemex closed its terminals several times in January because of stormy weather. Exports fell 4.1 percent to 1.434 million barrels a day in January from a month earlier.
A Labor Department report on March 7 report showed the U.S. shed jobs last month, signaling demand may slow in the world's biggest energy-consuming country. The U.S. unexpectedly lost 63,000 jobs in February, the biggest drop since March 2003.
"The jobless report wasn't favorable," said David Aleman, a senior trader at Grand Central Trading Co. in Newport Beach, California. "We're in uncharted territory and we are trading cautiously given there's a glut of oil."
The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world's oil, decided at a meeting last week to keep production targets unchanged, disregarding calls from U.S. President George W. Bush to provide extra crude.
"Prices are expected to remain high until the end of the year," OPEC President and Algerian Oil Minister Chakib Khelil said in Algiers yesterday. "Prices are high because of economic and geopolitical reasons."
To contact the reporters on this story: Grant Smith in London at gsmith52(at)bloomberg.net |
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