Iraqis and crude prices continue retreat

<a href=www.upi.com>By Hil Anderson UPI Chief Energy Correspondent From the National Desk Published 4/2/2003 5:47 PM View printer-friendly version

LOS ANGELES, April 2 (UPI) -- The final push by coalition troops into Baghdad got under way in Iraq Wednesday although oil traders appeared to be more focused with the latest weekly supply reports showing an equally dramatic jump in U.S. oil inventories.

May crude prices fell more than $1 per barrel on the New York Mercantile Exchange for the second consecutive day following the release of the U.S. Energy Information Administration's inventory report that this week included a major increase in the amounts of crude imported into the country and run through the refinery stream.

"With the high level of imports, U.S. commercial crude oil inventories ... increased by 6.8 million barrels," the EIA reported. "Over the last two weeks, crude oil inventories have increased by 10.5 million barrels."

The growing inventories coupled with continued coalition successes on the battlefield sent crude down by $1.22 to $28.56 per barrel. May Brent crude on the International Petroleum Exchange in London was down $1.15 at $25.21 per barrel.

May NYMEX gasoline lost a hefty 5 cents and dipped to 86.39 cents per gallon while heating oil, which reflects diesel prices, fell 2.23 cents to 71.86 cents a gallon.

The other closely watched weekly inventory report, which is issued by the American Petroleum Institute, pegged the build in crude stocks at more than 9 million barrels.

Saudi Arabia and Venezuela were the primary sources of the higher import flow. Ethnic turmoil in Nigeria's oil-rich Niger Delta appeared to be relatively quiet this week, although some 800,000 barrels per day of production remained shut down with no indications the major oil companies planned to restart their operations in the region any time soon.

The supply growth comes at an important time of the year for U.S. refiners who try to build up their supplies of gasoline in the spring in anticipation of higher summer demand. In addition, urban areas where cleaner-burning reformulated gasoline, or RFG, is sold are in the process of their annual switch from winter-formulated RFG to the summer formula.

Refined fuel supplies remained a concern, the EIA reported, as production of gasoline and jet fuel remained flat and diesel fuel production declined by around 100,000 barrels per day.

"Motor gasoline inventories rose by 1.7 million barrels last week but remain below the low end of the normal range," the agency reported.