NYMEX oil extends gains midday, heat oil off highs

www.forbes.com Reuters, 02.24.03, 12:34 PM ET

NEW YORK, Feb 24 (Reuters) - NYMEX crude oil futures extended early gains at midday on Monday as the United States and Britain vowed to push a new U.N. resolution that could set the stage for war against Iraq. Heating oil futures, which hit a fresh all-time high on forecasts of colder U.S. weather amid thin supplies, remained supportive. News that strike-hit Venezuela had partially lifted a force majeure for exports of some grades of crude oil had little impact on the morning trade. "Venezuela's government promised before that it would lift its force majeure totally at this time...so this partial lifting has little effect on the market," said Phil Flynn, market analyst at Alaron Trading in Chicago. At 12:30 EST (1730 GMT), NYMEX April crude was up 77 cents at $36.35 a barrel, trading $35.80 to $36.38. In London, April Brent crude traded 66 cents higher at $32.93 a barrel. On Monday, the United States said it expected U.N. action in "short order" on a new U.S.-British resolution on Iraq, which analysts say could pave the way for a possible U.S.-led attack against Baghdad. Both the United States and Britain want the U.N. Security Council to act on the resolution in about two weeks. White House spokesman Ari Fleischer told reporters early on Monday that the new resolution will be introduced this afternoon. Britain's U.N. ambassador, Sir Jeremy Greenstock, intends to present the resolution. 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. To pass, the resolution needs nine votes, and no vetoes. Chief U.N. arms inspector Hans Blix that he does not expect any more talks with Iraq over the destruction of the al-Samoud 2 missiles which were found to exceed the range set by the world body after the end of the Gulf War in 1991. Blix has ordered Saddam to start destroying the missiles by Saturday. NYMEX March heating oil was at $1.1445 a gallon, up 3.60 cents, after surging earlier to a fresh all-time high of $1.1525 a gallon. It surpassed the previous record of $1.15 struck on Dec. 3, 1979, a year after NYMEX launched heating oil futures. Recent large draws in U.S. distillate stocks, including heating oil, have been prompted by a lengthy stretch of severe winter weather in the U.S. Northeast, the biggest regional consumer of heating oil in the world. Supply tightened after an oil strike began Dec. 2 in Venezuela, which before then supplied the U.S. with about 13 percent of its crude and refined product imports. The five-day outlook of private forecaster Meteorlogix beginning Monday calls for temperatures to be as much as 12 degrees Fahrenheit below normal in the region. There is a chance of light snow in the southern part of the region late Thursday and Friday, it said, just as the area is still reeling from last week's worst snowstorm in seven years. The six- to 10-day outlook after that calls for temperatures to be near to below normal, Meteorlogix said. 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. 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. Meanwhile, OPEC President Abdullah al-Attiyah said Monday the cartel's producers had another 3 million to 4 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. NYMEX March gasoline was up 1.62 cents at $1.029 a gallon, moving from $1.022 to $1.037.