Oil prices slide amid war debate
www.theage.com.au Friday 14 March 2003, 2:30 PM
World oil prices slumped as the twisted road to war in Iraq appeared to lengthen, warm weather approached and Venezuela pumped more crude, traders said.
US President George W Bush had run in a diplomatic tangle in the UN Security Council, traders said.
"The troubles the Bush administration is having at the UN appear myriad, giving the market the impression that the imminency of war has been pushed out a bit," said Fimat USA analyst John Kilduff.
New York's reference light sweet crude contract for April delivery skidded $US1.82 to $US36.01 a barrel.
In London, the price of Brent North Sea crude oil for April delivery slid $US1.44 to $US32.47 a barrel.
The United States, looking for a way around French, Russian or Chinese vetoes, said it could allow a UN Security Council vote on war against Iraq to slip into next week or even forgo the vote altogether.
"We are still talking to the members of the Council with respect to coalescing around a position that wouldn't draw a veto, but the options remain: go for a vote and see what members say, or not go for a vote," US Secretary of State Colin Powell told Congress.
Michael McAllister, energy analyst at Fahnestock and Co, said news that Venezuela had recovered from strike action to push production up to 2.95 million barrels a day depressed prices.
"It is a jittery market that can be swayed by one story," he said.
Venezuelan President Hugo Chavez broke the news that the country's production had exceeded OPEC quotas, after having fallen to record lows during a crippling strike.
"Good news," Chavez announced from the Miraflores presidential palace in Caracas. "Oil production in Venezuela has reached 2.95 million barrels per day."
Expectations of lower fuel demand as spring approached in the northern hemisphere also weighed on prices, traders said.
"There are milder temperatures forecast in the States driving the natural gas, heating oil and crude lower," said Prudential Bache trader Tony Machacek in London.
"There is also talk about further delays of the UN making any decision on Iraq or tabling any further steps," he said.
Matthew Parry, commodities expert at the Economist Intelligence Unit in London, said prices would probably rise to $US40-45 per barrel if and when conflict breaks out.