Oil bounces back on NY fuel barge blast

www.dailyexpress.com.my 23 February, 2003

NEW YORK: Oil prices rebounded toward two-year highs on Friday as a fuel barge exploded at an oil terminal in New York, briefly sparking terrorism fears.

The blast in the Arthur Kill waterway between Staten Island and New Jersey sent prices on the nearby New York Mercantile Exchange (NYMEX) soaring before law enforcement officials said it was an accident.

The U.S. government has already put the country on the second-highest level of terror threat alert, warning that energy facilities might be targeted.

U.S. crude for delivery in April climbed 84 cents to $35.58, up more than 40 percent since mid-November. International benchmark Brent crude oil rose 71 cents to $32.28 a barrel, versus a two-year high of $33.10 hit last week.

“There is nothing like a big bang to wake up the market, but it seems it was not a terrorist attack so things cooled off again,” said Christopher Bellew of brokers Prudential-Bache International.

Prices were strengthening even before the explosion as the United States said it had massed enough troops in the Gulf to attack Iraq, the world’s eighth-largest oil exporter. “The underlying strength still comes from Iraq, where there is every prospect of war,” Bellew added.

U.S. Defense Secretary Donald Rumsfeld said more than 150,000 troops were ready to move on Baghdad, while Turkey and the United States moved closer to a deal on deploying tens of thousands of troops on Turkish soil.

Washington plans to propose a new resolution to the United Nations Security Council next week authorizing a strike against Baghdad.

The United States, backed by ally Britain, is likely to face strong opposition from France, Russia and China, who want U.N. arms inspectors to be given more time to search for Iraq’s alleged stockpiles of biological, chemical and nuclear weapons. Baghdad denies it has such weapons.

“Oil prices are unlikely to shift too far away from a continuing upward bias until the situation with respect to Iraq moves to a more decisive phase,” said Paul Horsnell of investment bank J.P. Morgan.

The global oil market had slipped on Thursday on U.S. data showing an unexpected recovery in U.S. commercial crude oil stocks from their lowest levels in 27 years.

But commercial U.S. stocks of heating oil are running at almost 31 percent below last year, latest official data shows.

Blistering cold weather in the northeastern United States has also boosted demand for heating oil in a world market that is otherwise suffering from slow growth.

Inventories have also been crimped by a cut in supplies from Venezuela, which is struggling to restore normal exports after 11 weeks of strike by key oil company employees.

Venezuela, the world’s fifth-largest exporter before the strike, is now pumping at about half its normal rate of 3 million barrels per day. -Reuters