NYMEX oil ends 2.5 pct up on Iraq, heatoil peaks

www.forbes.com Reuters, 02.24.03, 3:22 PM ET

NEW YORK, Feb 24 (Reuters) - NYMEX crude oil futures ended nearly a dollar higher for the second successive day on Monday, as the United States and Britain prepared to present to the United Nations a new resolution to disarm Iraq, seen as setting the stage for military action against Baghdad. Heating oil steamed to fresh all-time highs amid forecasts of colder weather ahead in the U.S. Northeast, the biggest user of heating oil in the nation. NYMEX crude oil for April delivery settled at $36.48 a barrel, gaining 90 cents or 2.5 percent, after moving between $35.80 and $36.55. The contract is edging closer to Thursday's $37.55 29-month peak, struck amid escalating fears that a war with Iraq could choke oil supplies from the Gulf region. In London, April Brent crude last traded 91 cents higher at $33.18 a barrel, trading $32.40 to $33.20. On Monday, the United States said it expected U.N. action in "short order" on a new U.S.-British resolution on Iraq, although France, Russia and Germany are opposed to it. The new draft resolution declares that Baghdad failed to take advantage of the final opportunity to disarm peacefully, according to the text obtained by Reuters on Monday. The resolution, to be formally introduced by Britain's U.N. ambassador, Sir Jeremy Greenstock, is co-sponsored by the United States and Spain. A spokesman for British Prime Minister Tony Blair said he hoped the measure would be put to a vote by mid-March, a signal there would be no invasion of Iraq before that time. Getting approval would be difficult in the face of opposition from France, Russia and Germany, who have veto power on the 15-member council. To pass, the resolution needs nine votes and no vetoes. Despite moves to give Iraqi President Saddam Hussein one final chance to disarm, the White House said President George W. Bush "has very little hope that Saddam Huseein will respond to diplomacy" to avert military action. Chief U.N. arms inspector Hans Blix said 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 settled 3.4 percent or 3.82 cents higher at $1.1467 a gallon. It surged to a fresh all-time high of $1.1535 a gallon, surpassing the previous record of $1.15 struck on Dec. 3, 1979, a year after NYMEX launched heating oil futures. "Expectations of colder weather have driven heating oil to the stratosphere," said Marshall Steeves, energy market analyst at Refco LLC. 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 calls for temperatures to be as much as 12 degrees Fahrenheit below normal in the region, just as the area is still recovering from last week's worst snowstorm in seven years. The six- to 10-day outlook after that calls for regional temperatures to be near to below normal, Meteorlogix said. Exxon Mobil Corp. (nyse: XOM - news - people), owner of the Staten Island, New York, oil terminal where a gasoline barge exploded on Friday, said it limited fuel sales to Northeast customers due to the incident. The U.S. Coast Guard is investigating. 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. News that strike-hit Venezuela had partially lifted a force majeure for exports of some grades of crude oil had little impact on the day's trade. NYMEX March gasoline settled 3.47 cents or 3.4 percent higher at $1.0475 a gallon, moving from $1.022 to $1.049.