Brent Crude Oil Falls as U.S. Forces Advance Toward Baghdad
<a href=quote.bloomberg.com>Bloomberg.com By Stephen Voss
London, April 2 (Bloomberg) -- Crude oil fell as much as 5 percent in London on expectations a push by coalition troops toward Baghdad is bringing closer the end of a war that's halted oil exports from Iraq, the Middle East's third-biggest producer.
U.S. soldiers have taken Karbala, southwest of Baghdad, and moved to within 25 miles (40 kilometers) of the Iraqi capital, Cable News Network reported, citing correspondents. Forecasts of an increase in U.S. oil stockpiles and the possibility that shut- down Nigerian fields may soon reopen, also weighed on prices.
``It looks as if the assault has started on Baghdad, so inevitably it's just a question of time'' before the war ends and oil starts pumping again, said Rob Laughlin, a director of energy broker GNI Ltd. in London. Iraq in February produced almost 2.5 million barrels a day, or 3 percent of the world's oil.
Brent crude oil for May settlement fell as much as $1.31 to $25.05 a barrel on London's International Petroleum Exchange, the biggest drop in six days. It traded 86 cents down at 2:15 p.m. Prices have slid 21 percent in the past month.
U.S. Marines seized a bridge over the Tigris river in central Iraq, the last needed for an assault on Baghdad, and took control of the main Highway 6 leading from Kut north to the capital, Reuters reported, citing an unidentified Marine officer.
A decisive engagement'' is beginning with the Republican Guard, Air Marshal Brian Burridge, the commander of U.K. forces in the Persian Gulf, said in an interview with the British Broadcasting Corp. Burridge said he wouldn't want to give the impression that within a day or two this is going to be over.''
In New York, crude oil for May delivery was down $1.02 at $28.76 a barrel in electronic trading on the New York Mercantile Exchange. New York futures dropped below the moving average for the past 200 days, helping reinforce the slide, brokers said.
Jittery
``Now we're getting reports that the war is going more in the U.S.'s favor in the advance toward Baghdad, and that triggers a bout of selling in this jittery market,'' said Keith Morris, oil equity analyst at BNP Paribas in London.
Price swings have been common as traders use war reports as reasons for buying or selling, he said. ``One day the oil market thinks the war will last forever, and then it's just a few days.''
In Nigeria, international oil companies have halted production of about 800,000 barrels a day in the past two weeks, or more than a third of the country's output, because of fighting between government troops and ethnic Ijaw militants before presidential elections on April 19.
``The general impression is that this is all orchestrated ahead of the elections,'' said BNP Paribas's Morris.
No Nigerian Strike
Brent crude fell 82 cents yesterday after the Nigerian Labour Congress, the country's biggest labor federation, called off a planned three-day strike over pay, easing concern the country's exports would be cut further.
``With Nigeria, there are rumblings that we may see more exports starting next week,'' GNI's Laughlin said.
The U.S. Department of Energy is expected to report today that U.S. crude oil inventories rose by about 2.15 million barrels last week from 273.9 million barrels, according to the average estimates of eight analysts surveyed by Bloomberg. The weekly report is due at 10:30 a.m. New York time.
The survey also predicted an increase in U.S. distillate supplies, although analysts were split on whether gasoline inventories rose or fell.
Venezuelan Gasoline
Venezuela's state oil company said it resumed gasoline exports, four months after an oil strike shut down shipments. A Petroleos de Venezuela SA spokesman said the first shipment of leaded gasoline will leave later today from the Paraguana refinery complex for the U.S. East Coast, where distributors are busy building up supplies before the U.S. summer driving season.
The state news agency said 360,000 barrels will be shipped. Exports won't be affected by the shutdown yesterday of a gasoline- producing unit at Venezuela's El Palito refinery, the spokesman said.
Gasoline futures for May delivery were down 2.52 cents, or 2.8 percent, at 88.9 cents a gallon on the New York exchange. Last Updated: April 2, 2003 08:23 EST