www.stuff.co.nz 16 January 2003

NEW YORK: Oil prices jumped toward two-year highs on Wednesday as US crude stocks sank to nearly their lowest level in more than two decades.

A 45-day oil workers' strike in oil exporter Venezuela has drained world oil stocks.

Fresh signs of a looming US-led war on Iraq further fired supply concerns that have pushed prices up more than 30 per cent in two months and reinforced fears that rising energy costs could stunt economic recovery in the US.

New York light crude closed 83 cents higher at US$33.25 a barrel, within 40 cents of two-year highs struck in late December.

Brent crude futures in London rose 61 cents to US$31.22 a barrel, just three cents below a new two-year-high of US$31.25.

US government data showed crude oil stockpiles fell more than 2 per cent to 272.3 million barrels last week, just 2 million barrels above the lowest level since the government started keeping records in 1979.

The report strengthened fears of an oil supply crunch as the US, the world's biggest consumer of oil, enters peak winter heating demand. Frigid temperatures are forecast in the US's northeast - a heavy consumer of heating oil - in the next 10 days.

The Energy Information Administration warned that "localised disruptions" would occur at US refineries if US crude oil inventories fell below 270 million barrels.