Oil slips after Bush delivers speech

www.bangkokpost.com Market sees war on the horizon

Oil prices edged lower yesterday but kept their firm tone after US President George W. Bush promised to deliver new intelligence on Iraq's alleged weapons programmes.

In his State of the Union address on Tuesday night, Bush said his Secretary of State Colin Powell would reveal the information on Baghdad's weapons of mass destruction to the UN Security Council next week.

US light crude slipped 15 cents to $32.68 a barrel and London Brent blend lost 17 cents to $30.10 a barrel.

``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).

``The timetable was set months ago by troop deployments. They will all arrive by the end of February.''

The threat of war in the Gulf region that supplies 40% of world crude exports and a strike that has cut exports from Venezuela have pushed up crude prices nearly 30% since late November.

Bush accused Iraqi leader Saddam Hussein of showing ``utter contempt'' for the United Nations by producing chemical and biological weapons and plotting to use them to dominate the Middle East.

He said Saddam had failed to account for 30,000 munitions capable of delivering chemical agents, 38,000 litres of botulinum toxin and materials that could produce as much as 500 tonnes of sarin, mustard and VX nerve gas.

The United States will ask the Security Council to convene on February 5 to hear fresh evidence of these and other intelligence findings.

``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 intelligence would form one part of the US push to persuade key countries _ including permanent Security Council members France, Russia and China _ that military force is necessary to disarm Iraq.

Washington and London are building forces in the Gulf region and are expected to be ready for combat in the latter part of next month. Chief UN weapons inspector Hans Blix is due to update the Security Council on weapons inspectors' findings on February 14.

Bush said secret communications and statements from suspects now in custody reveal Saddam ``aids and protects terrorists'' including members of al-Qaeda and could provide them with weapons of mass destruction.

Earlier on Tuesday, Washington received strong backing from its main ally against Iraq when Britain said Baghdad was in ``material breach'' of UN disarmament demands. On Friday, Bush meets British Prime Minister Tony Blair, who is expected to urge further patience with the UN approach for now.

Britain has consistently backed the US but had until now avoided directly alleging a ``material breach'' of November's UN resolution 1441 demanding Iraqi disarmament, which Washington argues is the trigger for war.

The US president's arguments in favour of toppling Saddam by force if necessary have left many countries unconvinced that Iraq poses an immediate threat. Many US allies have called for the inspectors to be given more time to work in Iraq.