NYMEX crude, products sharply up on barge blast, Iraq

www.forbes.com Reuters, 02.21.03, 1:47 PM ET

NEW YORK, Feb 21 (Reuters) - NYMEX crude oil and refined product futures remained sharply higher Friday afternoon after a gasoline barge exploded at an oil terminal on Staten Island, one of New York City's five boroughs. Exxon Mobil (nyse: XOM - news - people), the owner of the oil terminal, said the barge contained 110,000 barrels of gasoline. Two employees were unaccounted for after the blast and one other employee was injured, Exxon Mobil said. The blast in the narrow Arthur Kill waterway between Staten Island and New Jersey sent plumes of black smoke and flames into the sky. Staten Island makes up the southwestern-most part of New York City. Law enforcement officials said there were no initial indications it was anything but an accident. Fire officials initially said the barge contained propane. "We have low stock cover and events like this makes the market more headline-sensitive," said Jim Ritterbusch, energy market analyst and president of Ritterbusch & Associates in Illinois. At 1332 p.m. EST (1832 GMT) NYMEX April crude , making its debut in the front-month position, traded 69 cents higher at $35.43. It earlier jumped to $35.95, surging $1.21, on news of the blast, and has posted a session low of $35.15. The March contract expired on Thursday with a 37-cent loss at $36.79. In London, April Brent crude traded 58 cents higher at $32.14 a barrel. "The fire, the explosion on the barge, sent everything higher. It's more emotional than anything else," said a NYMEX floor trader. NYMEX March heating oil traded 3.43 cents higher at $1.093 a gallon, after hitting a session high of $1.12 on news of the barge explosion. Forecasts of colder weather in the U.S. Northeast, the nation's biggest user of heating oil, by next week also supported the early gains for heating oil. NYMEX March gasoline was up 3.42 cents at $1.00 a gallon, trading in a range from 97.50 cents to $1.01. U.S. defense officials said the United States and Britain have gathered more than 150,000 military personnel in the Gulf region along with dozens of warships and hundreds of aircraft. U.S. Defense Secretary Donald Rumsfeld in an interview on U.S. Public Broadcast System, said that the build-up was now sufficient for an attack. "We are at a point where, if the president makes that decision (to attack), the Department of Defense is prepared and has the capabilities and the strategy to do that." The United States will present a new U.N. resolution next week declaring Iraq in "further material breach" of a November resolution ordering Baghdad to disarm, opening the way for military action, a senior official said on Thursday. In other news affecting fundamental factors, OPEC Secretary General Alvaro Silva said in London that the oil producers' group could cover any interruption in Iraqi supplies in the event of war, but poured water on talk of suspending quotas. Nigerian public sector oil workers have ended a six-day pay strike, but have yet to return to export terminals now manned by replacement staff, officials said on Friday. The strikers are expected to be at their posts next week. OPEC-member Nigeria, the world's seventh largest exporter, exports around two million barrels per day (bpd) of crude oil. Its exports were not affected as oil companies used replacement workers at oil terminals during the brief strike. OPEC-member Venezuela, a key U.S. supplier, is still struggling to return crude output to normal levels amid a strike that started Dec. 2. Thursday's government inventory data, showing that distillate stocks, including heating oil, fell 4.6 million barrels to 103.6 million barrels, fostered concerns of a supply crunch amid the forecasts for much colder weather in the U.S. Northeast by next week.