Oil prices pull back from 29-month highs

www.newindpress.com REUTERS

NEW YORK: Oil prices pulled back from 29-month highs on Thursday as a modest rebound in US crude stocks prompted profit-taking from six straight days of gains. Fears of war in Iraq and over 11 weeks of disruption to oil exports from strike-bound Venezuela have pushed oil prices up around 45 per cent since November, strengthening concern over the potential fallout on the world economy. US light crude for March delivery fell 37 cents to $36.79 a barrel, sliding from a peak of $37.55 struck early on Thursday, which was its highest level since September 2000. Prices are less than $5 below an all-time peak of $41.15 posted in the run-up to the 1990-91 Gulf war. In London, benchmark Brent crude was 77 cents lower at $31.56 a barrel, off a 26-month-high of $33.10 touched last week. Dealers took the chance to reap profits from strong recent gains after government figures showed a 3.1million-barrel rise last week in US crude stocks, which had fallen to their lowest level since 1975. The scope for more price losses is limited, analysts said. Cold weather and reduced production from US refiners hurt from higher crude feedstock costs have slashed inventories of gasoline and heating fuel. "Continued strong demand related to the snowstorm that hit the Northeast over the past weekend may show up in next week's statistics and maintain bullish pressure," Washington-based PFC Energy said in a report. Shortage fears Concerns are growing that the scramble to meet winter heating fuel needs will leave the United States short of gasoline for the summer vacation driving season. Pump prices are already above $2 a gallon in some West Coast cities. Higher energy costs threaten further damage to an economy already in the doldrums. Wholesale inflation surged, while Americans bought foreign goods rather than stimulating domestic output, economic reports showed on Thursday. Oil dealers fear war in Iraq could disrupt supplies from the Middle East, which pumps a third of the world's oil. Iraq exports a little less than two million barrels daily, some four per cent of world oil exports. A senior Bush administration official said on Thursday that the United States will submit a new resolution to the divided UN Security Council next week seeking authorisation for military force against Iraq. UN diplomats have said the Bush administration was not likely to push the resolution to a vote until the first week of March, after another report from UN weapons inspectors. In Venezuela, rebel oil workers said they will stage protests on Thursday outside offices and installations of state-oil firm PDVSA, following the overnight arrest of a strike leader on rebellion charges. The workers pegged output at 1.4 million barrels per day, compared with 3.1 million barrels before they launched a crippling strike on December 2 meant to force President Hugo Chavez from power. The government says output stands at more than two million bpd. A six-day strike by oil workers in Nigeria, which had threatened to affect exports from Africa's biggest producer, was called off on Thursday following talks between unions and the government.