Tuesday's Commodities Roundup

www.timesdaily.com The Associated Press February 04. 2003 6:12PM

Crude oil futures ended sharply higher Tuesday, as petroleum-products rallied and traders covered short positions ahead of Secretary of State Colin Powell's appearance Wednesday at the United Nations. On the New York Mercantile Exchange, nearby March crude futures rose 82 cents to close at $33.58 a barrel. March heating oil rose 4.38 cents to close at 96.19 cents a gallon, while March gasoline jumped 4.38 cents to close at $1.006 a gallon. On London's International Petroleum Exchange, March Brent settled up 84 cents at $31.09 a barrel. Natural gas for February delivery fell .04 cent to settle at $5.762 per 1,000 cubic feet. There is "anticipation that Colin Powell's presentation to the U.N. Security Council on Wednesday will bring the U.S., if not the world, one step closer to war with Iraq," said Tim Evans, an analyst at IFR Pegasus. Powell is expected to present U.S. intelligence showing that Iraq hasn't fully disclosed its weapons program and isn't cooperating with weapons inspectors. The Bush administration is relying on the Powell presentation to win over skeptics in the Security Council, where key members remain opposed to the use of force against Iraq. Using photographs of mobile biological weapons labs and transcripts of intercepted Iraqi conversations, Powell will try to make the case that diplomacy and inspections have nearly run their course. Chief U.N. inspector Hans Blix, meanwhile, warned Iraq that it's "five minutes to midnight" and pleaded with the Iraqi regime to show that it is cooperating. Blix told a news conference that Iraq should take seriously U.S. warnings that the diplomatic window is closing and the prospect of military action is looming. A key question will be whether the U.S. will ask the Security Council for a resolution authorizing the use of force. Britain, America's closest ally, wants an authorization resolution, but the Bush administration has said it retains the right to attack Iraq without a second resolution. If the U.S. opts to seek a second Security Council resolution, "military action will be held off for a little longer, and it could take some of the war premium out of the market," said Tom Bentz, an analyst at BNP Paribas. Powell's report to the Security Council will dominate the headlines Wednesday. But traders will also be scrutinizing weekly inventory data from the American Petroleum Institute and the Department of Energy. For the first time in weeks, analysts are expecting the data to show a build in U.S. crude oil inventories, thanks to a surge in imports and low refinery utilization. Most analysts surveyed by Dow Jones Newswires expect crude stocks to show an average build of 2 million barrels for the week ended Jan. 31, as Venezuelan shipments to the U.S. continue to rise. Venezuelan oil output has climbed to 1.25 million barrels a day, according to dissident staff at state monopoly Petroleos de Venezuela SA. The increase in Venezuelan production could prompt the Organization of Petroleum Exporting Countries to consider an output cut in March, OPEC President Abdullah bin Hamad al-Attiyah said Tuesday. But analysts and some OPEC officials say that much will depend on whether there is a war in Iraq and how much oil production is disrupted as a result.