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UPDATE 1-U.S. mulls releasing emergency oil

LOS ANGELES, Aug 14 — The Clinton Administration is again examining ways to ease tight oil supplies, including loaning energy firms crude oil from the Strategic Petroleum Reserve (SPR), U.S. Energy Secretary Bill Richardson said on Monday.

At the Democratic National Convention in Los Angeles, Richardson said a decision on whether or not to swap oil from the SPR with energy firms was premature, but acknowledged many options for alleviating steep oil prices were being considered.

"No decision has been made and the president is the one to make those decisions,'' Richardson told Reuters. "There are a lot of options being talked about but nothing's being considered right now. It's premature.''

Traders and analysts said on Monday Richardson raised the possibility of oil swaps from the emergency stockpile, which currently holds 570.4 million barrels of crude, during a meeting in New York City on Friday with oil analysts.

Oil prices on Monday rose nearly $1 on the New York Mercantile Exchange (NYMEX), to $31.94 a barrel. Richardson reiterated he believes oil prices should be in the "low-20's'' and that prices topping $30 a barrel are too high.

Industry expert Philip Verleger, who attended Friday's meeting, said he argued for Richardson to open the reserve to oil swaps, saying they would limit wild swings in futures oil prices that have touched to decade-high levels in recent months.

Richardson discussed options for releasing SPR oil but the spirit of the meeting did not suggest a release was imminent, said another analyst who attended the meeting but asked not to be identified. An Energy Department spokesman confirmed the meeting took place, but would not give details.

Without elaborating on the meeting, Richardson said he would like to see increased world oil production and was concerned with low heating oil stocks ahead of expected strong winter demand.

"We hope that OPEC countries do keep an open mind about increased production when they meet again,'' Richardson said, referring to an Organization of Petroleum Exporting Countries (OPEC) September summit.

"But again we're concerned. The international market clearly needs more oil,'' he added. Richardson said he objected to Venezuela President Hugo Chavez's comments that oil prices should not fall from current prices and any decline would be a ''death sentence'' for producers, such as Venezuela.

The Energy Department last year hatched the idea of swapping oil from the Strategic Petroleum Reserve. White House economists rejected the plan on the grounds that it would interfere with the free market and influence oil prices.

Under the plan, firms would borrow SPR oil and then sell it in the open market, increasing supplies and pushing down crude prices. The firms would replace the initial oil loaned at a later date, plus extra barrels, after prices fell.

The administration has come under pressure from some members of Congress, especially in this election year, to release oil from the reserve this past winter to lower heating oil prices and this summer to push down gasoline prices.

Verleger said the swaps plan would help increase heating oil and gasoline inventories.

The administration is setting up a separate heating oil reserve for the Northeast to avoid supply disruptions in the region this upcoming winter. Richardson has said the 2 million barrel reserve would only be used in a supply emergency and not to control heating oil prices.

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