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Oil Prices Fall After Recall in Venezuela

Futures Remain Above $46 a Barrel

Associated Press
Tuesday, August 17, 2004; Page E03

Oil prices slipped yesterday after the president of Venezuela survived a recall referendum, though fears of potential supply interruptions in other parts of the world kept futures above $46 a barrel.

Light crude for September delivery fell 53 cents to settle at $46.05 on the New York Mercantile Exchange.

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The vote in Venezuela, the world's fifth-largest oil exporter, had been one of a slew of factors driving prices higher in recent weeks.

The concern was that if the opposition had won, there would have been a major overhaul of the state-run oil company, Petroleos de Venezuela SA, and production would have suffered. But President Hugo Chavez had 58 percent of the vote after 94 percent of the votes had been counted.

"It means oil supplies are not in as much danger as people were thinking," said Agbeli Ameko, managing partner at the Denver energy research firm Enercast.com.

Unrest continues in Iraq, and Russian oil giant Yukos, which pumps about 1.7 million barrels a day, continues its attempt to stave off bankruptcy. Energy markets have also been jittery amid fears of more terror attacks in Saudi Arabia -- the world's No. 1 exporter -- and civil unrest in Nigeria, which is the lead producer in Africa.

These uncertainties have fueled worries that oil supplies could be cut off at a time when demand is robust. Moreover, market watchers say there's little spare output capacity in the world to make up for shortfalls.

Last week Saudi Arabia said it could put on the market an additional 1.3 million barrels day, virtually all of the country's available production, which failed to deflate prices.

On Friday, Nymex crude futures closed at an all-time high of $46.58. On an inflation-adjusted basis, though, oil is still about $11 below its price leading up to the first Gulf War.

© 2004 The Washington Post Company