NYMEX oil falls nearly $1 in ACCESS trade

www.forbes.com Reuters, 03.17.03, 6:29 PM ET

NEW YORK (Reuters) - NYMEX crude oil futures fell by nearly a dollar in after-hours electronic trade Monday, in the wake of three straight losing sessions, as traders speculated that any U.S.-led war with Iraq would be short.

NYMEX April crude fell 96 cents, or 2.6 percent, to at $33.97 a barrel. In regular trading hours, April fell 45 cents, extending losses in the past three sessions to $2.90, or 7.7 percent.

In a roller-coaster day, the contract moved in a wide $2.35 range, shooting up to $36.35 and then quickly diving to $34.00.

"The market psychology has palpably changed and the urgency to buy has disappeared," said Peter Beutel, president of oil trading consultancy Cameron Hanover in New Canaan, Connecticut.

In London, Brent crude's new prompt month May shed 65 cents, or 2.1 percent, to settle at $29.48 a barrel.

The United States, Britain and Spain ended diplomatic efforts on Monday aimed at winning U.N. approval for an ultimatum to Iraq to disarm or face war. That clears the way for the three countries to launch a war without a vote in the Security Council, analysts said.

U.N. Secretary General Kofi Annan has ordered the pullout of U.N. staff from Iraq and said all U.N. work in the country, including the oil-for-food program, would be suspended.

U.N. arms inspectors were packing their bags and were expected to leave Baghdad early Tuesday.

U.S. President George W. Bush will deliver a television message at 8:00 p.m. EST in which he is expected to make a final ultimatum to Iraqi President Saddam Hussein to leave or face invasion.

U.S. Rep. Bill Tauzin of Louisiana, the Republican chairman of the House Energy and Commerce Committee, said earlier that the 600-million-barrel Strategic Petroleum Reserve had been switched to "flow mode" and were prepared to be put in the market if ordered by Bush.

Iraq exports about 1.7 million barrels per day (bpd) of crude under U.N. supervision as part of sanctions in place following Iraq's invasion of Kuwait in 1990.

Crude has lost about $5, or 13 percent, since NYMEX crude hit a 12-year high of $39.99 on Feb. 27. From mid-November to that high point, NYMEX crude prices had risen more than $15, or 60 percent.

Crude prices also rose as U.S. supplies thinned due to a crippling two-month strike in Venezuela backed by its oil workers that began Dec. 2. Venezuela's production is gradually being restored.

Crude futures jumped to an all time high of $41.15 in October 1990 after Iraq invaded Kuwait in August of that year.