Oil prices surge on Powell speech

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LONDON - World oil prices surged on Wednesday as the market braced itself for US Secretary of State Colin Powell's address to the UN Security Council and the release of weekly data on US stockpiles.

The price of reference Brent North Sea crude oil for March delivery rallied 65 cents to $30.90 a barrel.

New York's benchmark light sweet crude March-dated futures rallied 69 cents to $33.45 a barrel on Tuesday and was expected to make further progress when trading resumed later.

"We've seen a strong performance yesterday (Tuesday) on Nymex products and there's been no let-up overnight," said Prudential Bache oil broker Tony Machacek.

Machacek said investors were cautious ahead of Powell's presentation which he is expected to use to disclose sensitive intelligence in an effort to dispel widespread doubts - both in the corridors of power and on the street - that Baghdad is flouting UN demands to disarm.

Analysts meanwhile said the market would also be keeping a close watch on US weekly oil inventory data released later.

GNI analyst Lawrence Eagles said the market was expecting a 1.5-million-barrel build in US crude stocks, offset by a 3.5-million-barrel draw in distillate stocks and a 1.7-million-barrel drop in gasoline stocks.

US stockpiles have fallen in recent weeks to their lowest level in around 27 years after a general strike crippled exports from Venezuela, a key supplier to the US marketplace.

Opponents of Venezuelan President Hugo Chavez on Sunday called an end to a 63-day general strike.

But analysts said that having opted to keep the strike in force against the state oil company, the market was still unsure when oil exports would return to normal levels.

Opposition leaders have accepted that production has risen to 1.2 million barrels a day, while Chavez has claimed production is running at 1.8 million barrels.

But even that figure is well below the pre-strike average of around 3.0 million barrels a day.