Oil Prices Simmer Near Highs, Await Data
reuters.com Thu February 20, 2003 05:33 AM ET
LONDON (Reuters) - Oil prices simmered near the highest levels for more than two years Thursday, ahead of data expected to show further declines in U.S. fuel stocks as the United States gears up for a possible war on oil-rich Iraq.
U.S. light crude CLc1 slipped two cents to $37.14 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 only $4 below an all-time peak at $41.15 posted in the build up to the Gulf War in 1990.
In London, benchmark Brent crude was trading 16 cents lower at $32.17 a barrel, off a 26-month-high of $33.10 touched last week.
Apart from the threat of an attack on Iraq, prices have been driven by continued disruptions to oil exports from strike-bound Venezuela and possible interruptions to crude flows from Nigeria as oil workers down tools in a dispute over pay and conditions.
Before its general strike, Venezuela was fifth in world oil exporter rankings, while Nigeria is seventh and Iraq eighth.
"Until the situations in Iraq and Venezuela are clarified, oil prices are going to stay high and getting inventories rebuilt is not going to be easy," said Adam Sieminski, analyst at Deutsche Bank.
The Energy Information Administration (EIA) is to release its weekly U.S. fuel supply assessment Thursday, a day later than usual following a U.S. public holiday earlier this week.
The EIA figures are considered 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 following 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 STABLE SUPPLIES
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 scheduled for Thursday, postponed from a day earlier to allow union leaders to travel to Abuja.
Nigeria and Iraq export roughly two million bpd each and, along with Venezuela, are members of the Organization of the Petroleum Exporting Countries.
OPEC has pledged 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 many believe could coincide with 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.