NYMEX oil hits 4-month low as US/UK take oilfields
Reuters, 03.21.03, 4:10 PM ET
NEW YORK, March 21 (Reuters) - NYMEX crude oil futures fell to their lowest level in four months on Friday after U.S. and British forces seized control of key oil-producing areas in southern Iraq, signaling that the interruption in Iraq oil exports could be short.
Perceptions that the U.S.-led war would end quickly grew as the United States blasted Baghdad with massive air strikes and U.S. and British ground forces penetrated deep into Iraqi territory.
NYMEX May crude, the new front month, slumped to an intraday low of $26.30 a barrel, the lowest level for prompt crude since Nov. 26, before settling at $26.91, down $1.21, or 4.3 percent, on the day. It peaked at $27.70.
NYMEX prompt crude futures have now given up more than $13, or 33 percent, from the 12-year high of $39.99 reached on Feb. 27.
With the important oil fields near Basra and a strategic oil port in southern Iraq now in the hands of U.S.-led forces, analysts see a relatively rapid return of some of Iraqi oil exports.
"This suggests that Iraq may be able to resume some level of crude oil exports relatively quickly once the military invasion phase of this project is wrapped up and the military occupation phase begins," said Tim Evans, senior energy market analyst at IFR-Pegasus in an afternoon commentary.
In London, May crude settled down $1.15, or 4.7 percent, at $24.35 a barrel.
British Defense Chief Sir Michael Boyce said all key components of the southern Iraqi oil fields, which pump half the country's output, had been safely secured.
Only seven oil wellheads had been torched in the south, less than the 30 previously reported, although oil-filled trenches were also ablaze, he said.
British Defense Minister Geoff Hoon said the U.S. and British forces also secured Faw, a strategic port linking pipelines to Iraq's main Gulf export terminal Mina al-Bakr.
Bombs and missiles rained on Baghdad on a massive scale as the United States unleased its "shock and awe" campaign aimed at removing President Saddam Hussein from power.
Briefing U.S. congressional leaders, U.S. President George W. Bush said on Friday that "we're making progress" in the war on Iraq, though White House officials cautioned that U.S.-led forces still faced many risks.
As armored columns raced toward Baghdad, U.S. forces ran into resistance from Iraqi troops near Nassiriya on the Euphrates river, about 235 miles (375 kms) southeast of Baghdad, which halted their advance on Friday.
One murky issue, oil traders said, was whether Saddam survived a missile attack Wednesday night that targeted him and other Iraqi leaders in a compound at the heart of Baghdad.
Iraq said he did survive but there were reports that he might at least have been injured. ABC News said Saddam was seen being carried out of the rubble on a hospital stretcher wearing an oxygen mask.
Traders said a quick end to the conflict would hasten the return of Iraq's U.N.-supervised oil exports, which averaged 1.7 million barrels per day as of the week to March 14.
With Iraq's return to the market, however, the markets could be awash in oil as OPEC, led by powerhouse Saudi Arabia, has been ratcheting production up in the past months to cover any interruption of Iraqi exports.
The cartel members also raised oil flow to plug shortfalls caused by a long strike in major producer Venezuela, also an OPEC member.
Falling with NYMEX crude, NYMEX April heating oil futures