Monday's Commodities Roundup

www.wilmingtonstar.com Last changed: March 10. 2003 5:34PM

The Associated Press Crude oil futures fell on both sides of the Atlantic on Monday, as supply concerns eased somewhat ahead of a looming war in Iraq. The Organization of Petroleum Exporting Countries said the market is adequately supplied and that the group will ensure supply availability in the event of war in Iraq. "We will raise whatever we can to satisfy demand if there is a shortage," said OPEC President Abdullah bin Hamad Al-Attiyah. OPEC ministers are meeting in Austria to discuss output policy and what action, if any, the group will consider in case of a supply disruption in Iraq. Al-Attiyah wouldn't say whether OPEC ministers will discuss contingency plans, such as a Saudi-Kuwaiti proposal to suspend the group's official output quotas. He said OPEC's customers - especially those in Asia - say there is no need for extra oil at the moment. OPEC can tap about 3 million barrels a day in spare capacity, Al-Attiyah said, adding that about $6 to $7 of the current price of crude reflects a "war premium." Algerian Oil Minister Chakib Khelil, meanwhile, said the price of the group's reference basket of crude - now hovering around $33 a barrel - could tumble below $22 a barrel after a war in Iraq. The comments "took some of the steam out of the market," said Tom Bentz, an analyst at BNP Paribas Futures. At the New York Mercantile Exchange nearby April crude oil futures fell 51 cents to close at $37.27 a barrel. April heating oil fell 2.28 cents to close at $1.0857 a gallon, while April gasoline futures dropped 2.85 cents to settle at $1.1282 a gallon. At the International Petroleum Exchange in London, April Brent fell 35 cents to close at $33.75 a barrel. Natural gas for April delivery plunged 47.8 cents to settle at $6.515 per 1,000 cubic feet. OPEC has sharply increased its output in recent months in response to a disruption in Venezuelan production and the potential loss of Iraqi oil. Despite the increase, however, U.S. crude oil inventories have shrunk because of the disruption in Venezuelan exports and cold weather. But with Saudi and Venezuelan output on the rise, analysts expect crude inventories to continue to build. Five of seven analysts surveyed by Dow Jones Newswires on Monday expect crude stocks to grow by 2.15 million barrels in weekly data from the Department of Energy after increasing by 1.7 million barrels in last week's report. "We have seen a huge increase in both Saudi and Venezuela production in February. Some of those barrels should start trickling in now," said Peter Beutel, an analyst at Cameron Hanover in Connecticut. The Bush administration is facing an uphill battle at the Security Council as it seeks a vote on a resolution that gives Iraq until March 17 to disarm or face war. The United States wants to bring the resolution to a vote later this week. Britain and Spain support the resolution, but France, Russia and Germany remain opposed. French President Jacques Chirac said France will vote against any resolution that contains an ultimatum "no matter what the circumstances." Russian Foreign Minister Igor Ivanov warned earlier Monday that Russia will block the resolution. It was the first time Russia has explicitly said it would use its veto.