Oil prices going up on fears

www.news24.com 27/02/2003 09:39  - (SA)  

Singapore - Oil prices continued their upswing in Asian trading on Thursday on the strong likelihood of an Iraq war, blizzards and low inventories in the United States and tensions on the Korean peninsula.

New York light sweet crude for April delivery was trading around US$38.30 in after hours trade, US60c above its close.

"The day to day volatility is going to continue before any military action takes place between the United States and Iraq," said Victor Shum, senior partner of international energy consultants Purvin and Gertz Inc.

Shum said he believed it would be a short war after which the war price premium of $5 to $8 would disappear quickly and prices stabilise.

"But you never know what is going to happen on one day or another," he said, referring to outside factors such as North Korea testing missiles.

The blizzards and low inventories in the United States as well as strikes by oil workers in Venezuela and Nigeria were other factors hitting the market, he said.

Traders said Russian and West African oil producers were moving crude into Asia, especially Japan and South Korea, where inventories remained at comfortable levels.

Saudi Arabia was also seen chartering tankers for increased crude exports, according to SG Economic Research.

With more crude being made available on fears of supply disruption during the war, traders were already discounting a major price correction after a military conflict in the Middle East. - Sapa-AFP