Japan Assoc:Oil Mkt To Stabilize After Feb If No Iraq War

sg.biz.yahoo.com Wednesday January 22, 4:04 PM

TOKYO (Dow Jones)--The global crude oil market is expected to stabilize after February with supply and demand likely balanced, but only if there is no attack on Iraq, the head of Japan's oil industry body said Wednesday.

"OPEC's decision to increase production (from Feb. 1) will likely cover a supply shortfall" caused by a strike in Venezuela, and this will help balance the oil market after next month, said Keiichiro Okabe, chairman of the Petroleum Association of Japan.

"But that would be on the condition that there will be no attack on Iraq," said Okabe, who is also president and chairman of Cosmo Oil Co. (J.COO or 5007).

Some industry observers remain cautious. Abdullah bin Hamad Al-Attiyah, president of the Organization of Petroleum Exporting Countries, or OPEC, said Tuesday the group might find it difficult to compensate for the supply shortage in the U.S. market because many U.S. refineries are geared specifically to process Venezuelan crude.

On the New York Mercantile Exchange, February crude futures Tuesday jumped as high as $35.20 a barrel before expiring at $34.61/bbl, a gain of 70 cents. The new front month March contract ended with a gain of only 23 cents at $33.19/bbl.

(MORE) Dow Jones Newswires

01-22-03 0304ET