u.s oil supplies at 26 year lows..

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.

ARCTIC COLD
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
Venezuela.
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.