Oil prices touch 29-month highs - Crude price rises for the sixth straight day ahead of key oil inventory reports.

money.cnn.com February 19, 2003: 2:33 PM EST

NEW YORK (Reuters) - U.S. oil prices rose for the sixth straight day Wednesday, hitting 29-month highs ahead of government inventory data expected to show crude stocks shrinking in the United States.

Cold weather in the world's biggest heating oil market in the U.S. Northeast also underpinned prices, which are just $4.00 shy of the all-time high set after Iraq invaded Kuwait in 1990.

U.S. crude futures rose 39 cents to $37.35 per barrel in New York, the highest since September 2000.

International benchmark Brent crude oil was up 1 cent to $32.55 per barrel in London, and just below a two-year high of $33.10 touched last week.

Traders said the market remains wary as the United States and Britain, despite strong international opposition, are pushing for a new U.N. resolution that would authorize the use of force to disarm Iraq.

But the new resolution may not be put to a vote before early March, after another report by chief U.N. weapons inspector Hans Blix, diplomats said Wednesday.

"The world is facing the prospect of losing Iraq's two million barrels per day of oil exports, and perhaps some of Kuwait's oil too, at a time when oil prices already are well above $30 per barrel and stocks are abnormally low," the Center for Global Energy Studies said in a monthly report.

President Bush shrugged off global anti-war demonstrations Tuesday, while Washington and London worked on a second United Nations resolution to sanction war if Iraq fails to disarm immediately.

The United States warned reluctant ally Turkey Wednesday that time is running out to agree to a deployment of U.S. troops on its soil as an Iraq invasion force as the two states wrangled over the size of a multi-billion-dollar aid package.

The U.S. Defense Department ordered another 28,000 troops to the Gulf region this week as it builds a force of more than 200,000 for a possible invasion of the Arab oil power.

Iraq is the world's eighth-biggest oil exporter, selling roughly two million barrels per day (bpd) into the international market, and traders fear war could disrupt supplies from other producers in the Middle East, which supply 40 percent of world exports.

The White House has said a new resolution could be proposed this week to the U.N. Security Council, where Bush has met opposition from France, Russia and China, who want more time for weapons inspections to continue. Tight supplies

Government data to be released Thursday are expected to show that U.S. crude oil stocks fell by a modest 1.0 million barrels, a Reuters survey of analysts showed.

Analysts also expected a draw of 3.0 million barrels in distillates, including heating oil, and a minor decline of 500,000 barrels in gasoline stocks.

Concerns over supply disruptions resulting from a war come at a time when strike-hit Venezuelan exports struggle to return to normal and senior oil workers in Nigeria walked out, although supplies from Africa's top producer have remained normal so far.

Venezuela's oil production was 1.4 million bpd Wednesday, roughly 50 percent of normal levels, despite government efforts to increase output.

Venezuela accounted for 13 percent of U.S. oil imports before the strike, aimed at toppling President Hugo Chavez, and the stoppage has severely dented U.S. fuel stocks.

U.S. stocks of crude oil already are below 270 million barrels, seen as the minimum level required to keep the nation's refineries running normally.

Supplies could be tightened further if there is an escalation in a Nigerian oil strike over pay and conditions that began Saturday but has not touched exports so far.

Nigeria pumps just over two million bpd and is the world's seventh-biggest exporter.