Oil Hovers Above $37
reuters.com Thu February 20, 2003 01:52 AM ET By Tanya Pang
SINGAPORE (Reuters) - Oil prices were little changed near a 29-month peak Thursday, ahead of new data that may show further shrinkage in wafer-thin U.S. fuel stockpiles as the United States gears up for a possible invasion of oil-rich Iraq.
U.S. light crude CLc1 slipped 10 cents to $37.06 a barrel, just below a high at $37.45 struck Wednesday, which marked the highest level since September 2000 when soaring oil markets prompted the U.S. government to release emergency reserves.
Crude is just $4 below an all-time peak at $41.15 posted in the build up to the Gulf War in 1990.
Continued disruptions to strike-bound Venezuelan oil exports and possible interruptions to crude flows from Nigeria as oil workers down tools in a dispute over pay and conditions have stoked prices higher as well as the threat of an attack on Iraq.
Venezuela is fifth in world oil exporter rankings, while Nigeria is seventh and Iraq eighth.
"The market's still preoccupied with potential war, but it's not only that. Inventories are running very low and there's a real lack of any meaningful spare capacity," said Mario Traviati, head of energy at Merrill Lynch in Asia-Pacific.
"Anymore disruption to production would leave the world short of oil," he said.
The Energy Information Administration (EIA) is due to release its weekly U.S. fuel supply assessment Thursday, a day later than usual due to the public holiday earlier this week.
The EIA figures are used as a barometer for the demand and supply balance in the world's biggest oil consumer.
Figures last week showed U.S. crude stocks running at the lowest levels since the mid-1970s at just below 270 million barrels, the minimum needed to keep U.S. refineries operating.
A blast of Arctic weather has pumped up demand for heating fuel in the United States, where fuel supplies were already running down due to the anti-government strike in Venezuela, which crippled the domestic oil industry and all but cut off some 13 percent of U.S. oil imports.
Analysts forecast this week's EIA report would show further declines, with crude seen off by one million barrels and distillates, which include key heating oil, falling by three million barrels.
OPEC PLEDGES OIL
Striking state oil workers said Wednesday that Venezuelan crude production was at 1.4 million barrels per day, although the government pegged output closer to two million bpd.
Before the strike began on December 2, production was a little over three million bpd.
Exports from Nigeria, Africa's biggest producer, appeared not to have been affected so far by a strike by senior oil workers, who began their dispute Saturday.
Talks to resolve the dispute were due Thursday, postponed from a day earlier to allow union leaders to travel to Abuja.
Nigeria and Iraq export roughly two million bpd and, along with Venezuela, are members of the Organization of the Petroleum Exporting Countries.
OPEC has pledge to maintain stable supplies to the global market of 76 million bpd even in the event of war.
A Gulf source said Wednesday that Saudi Arabia, the world's biggest exporter, would support a temporary suspension of the cartel's official output limits if an attack halted overseas sales from Iraq.
The senior OPEC delegate said that even if OPEC did not formally suspend production limits, members with spare capacity would pump at will.
OPEC's current production ceiling stands at 24.5 million bpd with most members near to or at full capacity. The cartel is due to hold a policy meeting on March 11, which may be about the timing of a strike on Iraq.
The United States and Britain said Wednesday they were working on a new resolution seeking United Nations' authorization to use force to disarm Iraq of banned weapons they claim it has stocked. The new resolution is expected to be submitted to the Security Council within a week.
Diplomats said Washington was not likely to push for a vote on the resolution until well into the first week of March after another report by U.N. weapons inspectors, an indication that any attack against Iraq will not take place until the second week of the month at the earliest.
Iraq denies U.S. allegations that it has stocked any biological, chemical or nuclear weapons.