u.s oil supplies at 26 year lows..

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    More boomage for oil at a bourse near you!

    LONDON, Jan 3 (Reuters) - Oil prices rose on Friday on fears
    that a strike in exporter Venezuela would cause a supply crisis
    in the United States, where stockpiles are dwindling just as
    Arctic weather is set to freeze a large part of the country.
    President George W. Bush's warning to Iraq that President
    Saddam Hussein's "day of reckoning is coming" also helped fuel
    the rally, because any halt to Baghdad's exports could create
    even deeper shortages.
    International benchmark Brent crude oil jumped 37 cents to
    $29.80 per barrel, while U.S. crude futures gained 42 cents to
    $32.27. Both markers stood within $1.50 of a two-year high.
    "The world oil system will have extremely low inventory
    cover as it enters what is perhaps the most geopolitically
    uncertain period for some twenty years," said Paul Horsnell at
    investment bank J.P.Morgan.
    U.S. government data on Thursday showed oil inventories in
    the world's largest market plummeting by 16 million barrels last
    week as Venezuelan exports slowed to a trickle.
    "Another fall of this magnitude would bring inventories down
    to their lowest level since 1976, and remove all remaining
    operational flexibility from the system," Horsnell said.
    Current crude oil prices, already high enough to damage
    economic growth in the industrialised world, have yet to reflect
    the true scale of the supply squeeze, Horsnell said.
    Venezuela was the world's fifth largest oil exporter and
    usually supplies about 13 percent of U.S. oil imports.
    Exports have virtually ground to a halt since early December
    due to the strike aimed at ousting President Hugo Chavez, and no
    resolution is in sight.
    "The main concern is that the deficits are not just large,
    they are growing," Horsnell said.

    While supply tightens, consumption in the world's largest
    oil consumer -- already up five percent on last year in December
    -- is set to jump over the next few weeks.
    Meteorologists at investment bank Salomon Smith Barney
    predicted on Thursday a big wave of Arctic air would blanket
    large parts of the United States in the second week of January,
    which could bring the lowest temperatures so far this winter.
    OPEC exporters have pledged to plug any supply gap created
    by the Venezuela strike, but Middle East oil takes up to six
    weeks to reach the United States compared with five days from
    Horsnell said the United States should seriously consider
    releasing emergency stocks to cover the Venezuelan shortfall,
    but that the White House could be holding fire as Washington
    prepares for war on another major oil exporter, Iraq.
    In President Bush's warning to Saddam he also said there was
    little evidence the Iraqi leader would disarm peacefully.
    Iraq's deputy prime minister Tareq Aziz accused Washington
    of of "an imperialist design" to invade his country regardless
    of the verdict of U.N. weapons inspectors, who are combing Iraq
    for alleged biological, chemical and nuclear arms.
    Aziz said Washington was planning to invade his country as
    part of a plan to control the region's oil supplies.
    "That design is to invade Iraq, to occupy Iraq and use the
    national resources of Iraq for the purposes of ... the American
    capitalist regime," he said.
    "When America becomes stronger economically, when America
    takes over the whole oil of the region and puts it in its hands,
    it is going to pressure politically and economically every
    country that needs oil," Aziz said.
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