War jitters push NYMEX crude toward $38

www.upi.com From the National Desk Published 3/7/2003 5:48 PM

NEW YORK, March 7 (UPI) -- Crude prices took another strong step higher Friday, reaching a 12-year high on the New York Mercantile Exchange after the United States and Britain called on the United Nations to give Iraq only 10 more days to fully disarm.

April NYMEX crude futures tested the $38 per barrel level before stepping back and settling 78 cents higher on the day at $37.78 per barrel as traders appeared unwilling to be caught short in the event the situation deteriorated further over the weekend.

The bullishness of recent months continued Friday as the market digested the uncompromising tone of President Bush's Thursday night news conference, which was followed up by the allies' proposal to the U.N. Security Council that Iraq be fully stripped of its weapons of mass destruction by March 17.

"The Security Council has to give a clear message that the time has come to stop playing hostage to those who...mistakenly interpret our aspiration to peace as a sign of weakness," British Foreign Minister Jack Straw told the Security Council. "We have to put pressure on Saddam Hussein. We have to put this man to the test."

The test would come in the form of blitz by American and British forces into Iraq, which holds the world's second-largest oil reserves and also, allegedly, weapons of mass destruction that Baghdad is prohibited from possessing.

The St. Patrick's Day deadline is on a Monday while trading on the April contract concludes Friday March 21, leaving traders roughly a week to get their books for the month balanced before the April market is finalized.

France has vowed to block any U.N. resolution authorizing force to settle the matter, however Bush has indicated he will not be stalled or dissuaded from launching the attack if Iraq's chemical, biological and possibly nuclear arsenal is not promptly dismantled.

The turmoil comes at a time when the United States continues to have relatively low supplies of crude on hand. The low crude supplies, coupled with refineries being off-line for annual maintenance, have translated to higher prices throughout the refinery stream.

April NYMEX heating oil moved a hefty 5.29 cents higher to $1.1085 per gallon as cold weather continued and demand for heating oil in Europe reportedly picked up. Gasoline for April also gained more than 5 cents Friday to settle at $1.1567 per gallon.

The retail gasoline price paid by consumers limbed more than 2 cents to a nationwide average price of $1.686 per gallon for regular and Californians are paying more than $2.00 per gallon in most areas prompting a call Thursday for a federal investigation by Sen. Barbara Boxer, D-Calif.

"Even with a substantial increase in crude oil imports from Venezuela, there was still not enough crude oil in the petroleum system to build both crude oil inventories, as well as product inventories," the U.S. Energy Information Administration said in its weekly petroleum summary. For both crude oil inventories and product inventories to return to more normal levels, crude oil imports will need to continue to rise over the next several months."

(Reported by Hil Anderson, UPI Chief Energy Correspondent)