Oil hovers near $33, finds little new in Bush speech
www.forbes.com Reuters, 01.28.03, 11:52 PM ET By Tanya Pang
SINGAPORE, Jan 29 (Reuters) - Oil prices held steady on Wednesday after U.S. President George W. Bush braced his nation for war and called on the U.N. Security Council to meet next week to view evidence of Iraq's alleged illegal arms programmes.
In the annual State of the Union speech, Bush vowed to use the full force of the U.S. military against Iraq if needed and made clear the United States was prepared to act to disarm Iraq with or without U.N. backing.
"We will consult, but let there be no misunderstanding: If Saddam Hussein does not fully disarm, for the safety of our people, and for peace of the world, we will lead a coalition to disarm him," he said.
U.S. light crude
"The market has completely accepted that there will be war and that's already in the price," said Sarah Emerson, managing director at Boston-based Energy Security Analysis (ESAI).
Bush called for the U.N. Security Council to convene on February 5 to hear Secretary of State Colin Powell present information and intelligence about Iraq's suspected activities with weapons of mass destruction.
"It was interesting that he was so explicit on the February 5 date. The market has a new date to think about, until that time everyone's going to be reading the tea leaves for what Powell's going to present," Emerson said.
The Security Council is due on Wednesday to discuss a report compiled by U.N. weapons inspectors after two months of searches in Iraq.
Chief weapons inspector Hans Blix told the Council on Monday he was unable to corroborate U.S. claims that Baghdad had built an arsenal of illegal weapons, saying he could not give a verdict one way or another. But Blix sharply criticised Iraq for not disclosing all of its arms programmes.
TROOPS SET TIMETABLE Bush is yet to convince some key Security Council allies that Baghdad has broken U.N. resolutions by hiding biological, chemical and nuclear arms.
U.S. and British forces are heading towards the Gulf region and are expected to be ready for combat next month. British Prime Minister Tony Blair, a close ally of Washington, will meet Bush on Friday at the president's Camp David retreat, where they are expected to agree on the strategy and timing of any attack on Baghdad.
ESAI's Emerson said Bush's speech had not changed any time frame for a possible strike on Iraq. "The timetable was set months ago by troop deployments. They will all arrive by the end of February," she said.
The threat of war in the Middle East, which supplies 40 percent of crude oil traded on the world market, and a strike in Venezuela that has paralysed deliveries from the fifth-ranking oil exporter has pushed crude prices up almost 30 percent since late November.
The United States takes about 13 percent of its oil imports from Venezuela and the eight-week opposition-led strike has severely dented supplies into the biggest petroleum consumer.
Traders will get a fresh view on the health of U.S. fuel stockpiles when the government Energy Information Administration releases its weekly report on national inventories.
Analysts expect U.S. crude stocks to fall by two million barrels in the week to January 24 due to the Venezuelan strike, according to a Reuters poll.
Information from ship agents and port authorities indicates Venezuelan exports rose sharply last week from very low levels to about 700,000 barrels per day. Despite the improvement, levels are still only at about 25 percent of pre-strike levels.