NYMEX oil seen up amid wrangling on Iraq, cold

www.forbes.com Reuters, 02.24.03, 9:35 AM ET

NEW YORK, Feb 24 (Reuters) - NYMEX crude oil futures are expected to rise on Monday as the market awaits a new U.S.-British resolution on Iraq to be sent to the United Nations in advance of a possible U.S.-led attack. "Waiting for war," said a New York trader. More cold weather in the United States also should keep products supportive, traders said. NYMEX April crude was called to open 20 cents to 30 cents higher after ending overnight ACCESS trading up 29 cents at $35.87 a barrel, trading $35.47 to $36.04. In London at 9:30 a.m. (1430 GMT), April Brent crude traded 25 cents higher at $32.52 a barrel. The United States and Britain want a U.N. decision on Iraq within about two weeks of submitting a new resolution to the Security Council early this week, British Foreign Secretary Jack Straw said on Monday. The new resolution, setting the stage for war in Iraq by declaring Baghdad in violation of U.N. demands will be introduced Monday, according to Security Council diplomats. Britain's U.N. ambassador, Sir Jeremy Greenstock, intends to introduce the resolution, which a spokesman for British Prime Minister Tony Blair hoped would be voted on by mid-March. Getting approval will be difficult in face of opposition from France, Russia and China, who have veto power on the 15-member council. Among the other members only Spain and Bulgaria support the United States and Britain while the other nations either lean toward France or are undecided. Technical analysts on Monday were expecting NYMEX crude oil futures to extend higher in the open outcry session after strong gains on products futures in ACCESS trade. The NYMEX oil complex ended sharply higher on Friday as traders, already edgy over a looming war with Iraq, were jolted by news of a gasoline barge explosion at an oil terminal on Staten Island, one of New York City's five boroughs. Analysts said Friday's break and close above resistance in the $35.50 a barrel region and subsequent gains above $36 for the April contract had rekindled waning bull momentum. The focus now should be on closing the gap down from $36.10 on the continuation chart left from the March contract expiration. The surge in products prices in reaction to Friday's barge blast showed the skittish nature of the present trading climate. "This is a very nervous market, and traders were already looking to buy ahead of colder weather over the weekend," said Cameron Hanover's Peter Beutel. "News of a fire, explosion was more than the market could bear." Exxon Mobil Corp. (nyse: XOM - news - people) said on Friday units at its 516,500 barrels per day (bpd) refinery in Baytown, Texas were in planned maintenance, but would offer no further details. "I can confirm we are in the middle of a planned maintenance, which started last Saturday," a company spokeswoman said. The company declined to cite the capacities of the refinery's units or specify which unit or units were down. U.S. products inventories have been depleted because of cold weather, especially in the U.S. Northeast heating oil-consuming region, and by the strike curbed supply flow from OPEC member Venezuela. OPEC President Abdullah al-Attiyah said on Monday the cartel's producers had another three to four million barrels a day of spare capacity to call on should war stop Iraqi exports. The figure is much higher than most independent estimates of spare capacity. More below-normal cold weather is forecast for this week in much of the United States, according to forecasters at Meteorlogix. NYMEX March heating oil was called 1.50 cents to 1.75 cents higher after ending ACCESS trade up 1.80 cents at $1.1265 a gallon, the overnight high. Nearby technical resistance is expected at $1.1350, just below the overnight high of $1.1290 cents. Support is due at $1.06. NYMEX March gasoline was called to open 0.75 cent to 0.80 cent higher after ending overnight trade up 0.82 cent at $1.0210 cents a gallon. Resistance is expected at $1.0360. Support is expected at $1.00.