Oil prices up, await U.S. fuel data - Markets focus on tight heating oil supplies, war worries
LONDON, March 5 — World oil prices rose on Wednesday on concerns that weekly U.S. government data due out later in the day would show further tightening of heating oil supplies as Washington built up troops for war on Iraq. BROKERS SAID another bombing in the Philippines injected fresh uncertainty into the market along with news that Russian business people were leaving Iraq. International benchmark Brent crude oil rose 36 cents to $33.45 per barrel, while U.S. crude futures gained 34 cents to $37.23. “Although there is no direct link with the Philippines and oil, people are taking the bombings as an overall rise in terror tensions and an area of concern,” said analyst Lawrence Eagles at brokers GNI-Man in London. “News that Russian families are pulling out of Iraq has also raised expectations of a step closer to war. But the U.S. data will dominate today,” he said. Police said a home-made bomb exploded in a southern Philippine city on Wednesday, a day after a bomb attack killed 21 people at an airport to the east. Military officials blamed Tuesday’s attack on the Muslim separatist group the Moro Islamic Liberation Front, but it denied involvement. U.S. crude has swung in a wide range of more than $4.50 over the last week since touching a 12-year high of $39.99 on Feb. 27, and is still 20 percent above where it started the year. The prospect of a war in oil exporter Iraq comes at a time when crude stocks in the United States are hovering at their lowest levels since the mid-1970s. Heating oil shortages in the northeastern United States have also raised fears of a supply crunch in the world’s top consumer. The U.S. government will release later on Wednesday its weekly stocks report, and analysts expect crude supplies to rise while winter heating oil stocks fall. On top of a crippling oil strike in Venezuela, which normally supplies 13 percent of U.S. imports, traders fear war in Iraq may disrupt exports from other countries in the Middle East, which account for 40 percent of world exports. OPEC REASSURES OPEC exporters have said they can cover any shortfall if an attack on Iraq disrupts its exports of roughly two million barrels per day. But traders and analysts say that most members of the Organisation of the Petroleum Exporting Countries are already pumping at full tilt and have little spare capacity outside the world’s top producer Saudi Arabia. “We’re looking for crude to move above $40 when the attack is launched on Iraq. Even if OPEC does increase production we still see supplies remaining tight,” said Tetsu Emori, chief strategist at Mitsui Bussan Futures in Tokyo. The United States ordered 60,000 more troops into the Gulf region on Tuesday in its preparations for a military strike on Iraq, which it says is not in full compliance with U.N. demands to disarm weapons of mass destruction. The United States and Britain have already amassed a 250,000-strong force in the region. U.S. Secretary of State Colin Powell said Washington was gaining support for a United Nations resolution backing war, but opponents France, Russia and Germany met in Paris to coordinate their opposition. Some 150 members of Russia’s business community in Iraq were flying out of the country on Wednesday, the Interfax news agency quoted a Russian diplomat in Baghdad as saying. U.S. preparations hit a snag at the weekend when Turkey’s parliament voted against the deployment of U.S. troops on its soil, which would have given access to northern Iraq. Turkey’s powerful armed forces backed a tentative government move to submit a fresh motion to parliament allowing U.S. troops into the country. © 2003 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.