<a href=quote.bloomberg.com>Bloomberg By Nesa Subrahmaniyan and Wing-Gar Cheng

Singapore, April 21 -- Crude oil fell as much as 1.6 percent in New York on speculation the U.S. will seek an early resumption of Iraqi oil exports, adding to concern about a glut as northern hemisphere weather warms up and cuts demand.

The U.S., which invaded Iraq to topple its leader Saddam Hussein, is seeking an end to United Nations sanctions on the Middle East producer's oil exports to help fund its recovery from the war. The U.S. last week awarded Bechtel Group Inc. a $680 million contract to rebuild roads, bridges and other facilities, the largest part of a $1.1 billion reconstruction project.

Iraq ``needs the money for construction and that is a very, very strong incentive to get it started early,'' said Anthony Nunan, manager of the international petroleum business at Mitsubishi Corp. in Tokyo.

Crude oil for May delivery fell as much as 49 cents to $30.06 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It traded 16 cents lower at $30.39 a barrel at 11:40 a.m. Singapore time.

On Thursday, oil rose $1.37, or 4.7 percent, to $30.55 a barrel, its biggest gain in three weeks, after members of the Organization of Petroleum Exporting Countries said the group should cut output at a meeting scheduled for Thursday, to accommodate any resumption in Iraqi shipments. The exchange was closed Friday for the Easter holiday.

The U.S. will ask the UN to lift its sanctions on Iraq in phases, keeping supervision of oil sales as it gradually transfers other parts of the country's economy to a new interim authority, the New York Times reported on Saturday. The step-by-step approach is designed to avoid confrontation with France and Russia, which opposed the U.S.-led invasion of Iraq.

Northern Fields

Iraq will be able to start pumping oil from its northern fields in weeks because of limited damage to installations, the U.S. military has said. U.S. Army engineers believe that storage tanks in the area around Kirkuk as well as the region's main export terminal in Turkey are full, the Wall Street Journal said.

The U.S. still has obstacles to overcome before it persuades the UN to endorse any resumption of Iraqi oil exports. On Friday, Russia said the UN should verify that Iraq is free of weapons of mass destruction before it cancels sanctions against the country, rather than ``automatically'' lifting them.

UN sanctions on Iraq should be lifted only by the UN Security Council under conditions set by UN resolutions, Russian Foreign Minister Igor Ivanov said in a statement.

The only big problem is the battle between the UN and the U.S.,'' Mitsubishi's Nunan said. Who has the authority to sell? The U.S. doesn't want to cede its authority to the UN, and that's the big problem.''

Iraq Exports

Oil exports from Iraq, OPEC's third-largest producer in February, have been suspended since March 20 when the U.S. and U.K. invaded the country to remove the regime of Saddam Hussein.

``Iraq may export 1.5 million barrels a day of crude oil to start off and then rising to 2 million barrels within the next three months,'' said Hiromune Fujisawa, oil futures trader at Nihon Unicom Corp. in Tokyo.

OPEC, which pumps a third of the world's oil, lowered its forecast for global demand because of SARS, or severe acute respiratory syndrome. In a monthly report released on Friday it reduced its projection for worldwide consumption of oil to 77.35 million barrels a day, 80,000 barrels down from its forecast last month.

The outbreak of SARS is reducing travel and tourism and is feared to undermine economic growth in the affected regions,'' OPEC said. In addition, the war in Iraq has had an adverse effect on air travel. The resulting decline in aviation fuel consumption is expected to continue through the second quarter of 2003.''

OPEC Output

OPEC output rose to a 1 1/2-year high in March as members made up for disruptions caused by the U.S.-led invasion of Iraq. OPEC's benchmark oil price index has dropped 12 percent during the past month, to $26.25 on Thursday.

A successful accord to reduce output could have the desired effect of preventing OPEC's benchmark price from falling below the group's target of $22 to $28 a barrel, traders said.

``Traders expect prices to rise once there is less oil in the market after OPEC cut output,'' Nihon's Fujisawa said.

Iran, Algeria, Qatar and Indonesia have all called for a cut in OPEC output. Venezuela estimates overproduction at about 2 million barrels a day and may need to reduce production by 11 percent, said Luis Vierma, deputy minister at the Oil Ministry, quoted by Venpres news agency on its Web site. Last Updated: April 21, 2003 00:02 EDT

<a href=reuters.com>Reuters, Thu April 17, 2003 04:01 PM ET

NEW YORK (Reuters) - World oil prices rose nearly five percent on Thursday ahead of next week's emergency OPEC meeting as traders expect the cartel to tighten global crude supply.

U.S. crude futures in New York added $1.37 to $30.55, the highest price for more than two weeks, while Brent crude oil in London gained 86 cents to $25.85 per barrel.

Prices rose as Iran called on OPEC to cut its official output limits at the April 24 meeting, warning that failure to rein in supply could trigger a price collapse.

Having raised exports close to maximum capacity ahead of the U.S.-led war on Iraq, OPEC ministers have taken fright from a 30 percent drop in prices.

Iran's view is the most hawkish aired so far by members of the Organization of the Petroleum Exporting Countries, which controls over half of world exports.

Algeria believes OPEC could balance markets simply by restoring compliance to its existing 24.5 million barrel per day (bpd) ceiling, cutting out two million bpd of surplus.

Paul Horsnell, oil analyst at investment bank J.P.Morgan, said predictions of a price crash did not stand up and expected any supply cuts to push prices back up.

"We do not think that OPEC should be in any rush to cut production at this point," he said.

"There is a risk that, in responding to overly bearish sentiment, OPEC will simply repeat the mistake of last year and over-tighten the market."

Oil demand usually dips in the second quarter because of lower winter fuel needs in the northern hemisphere. But analysts point to an expected recovery in demand over the summer months when gasoline use soars during the long summer break.

The International Energy Agency, energy watchdog for 26 industrialized nations, has urged OPEC to be cautious in any supply cut, saying that prices are still too high for companies to rebuild low stocks.

IRAQ FACTOR

Iranian Oil Minister Bijan Zanganeh said the expected return of Iraqi oil exports was an important development for world oil markets which could lead to a "price challenge."

He said he expected Iraqi output to return to its pre-war rate of three million bpd in short order, rising another 500,000 bpd within a year.

Output from Venezuela and Nigeria is also recovering after political strife in those countries hit exports.

"Any increased supplies from Venezuela, Nigeria or, less plausibly in the short run, Iraq, would need to be offset if and when they arrived," Horsnell said, "but we would view any reduction in the total as skewing price risks to the upside."

The U.S. military reckons it could get Iraqi oilfields pumping at two-thirds of pre-war levels within weeks, but exports will not resume until a political authority is created in Baghdad and United Nations sanctions are lifted or modified.

President Bush on Wednesday urged the U.N. to lift sanctions, but United Nations diplomats said an end to the embargo should depend upon the world body certifying that Iraq is free of nuclear, biological and chemical weapons, one of the reasons Washington gave for launching the war.

The U.N. Security Council is likely to again sidestep any decision on a mechanism for Iraqi oil sales when it next moves to keep humanitarian goods flowing to Iraq in the next few weeks as it will raise questions of who would be in charge of post-war Iraq in the near term, diplomats said.

<a href=ogj.pennnet.com>Oil & Gas Journal Marilyn Radler Economics Editor

HOUSTON, Apr. 17 -- Despite oil supply disruptions in some key countries, other oil exporters have increased output to assure consumers will be adequately supplied. This, said the International Energy Agency in its latest Oil Market Report, has placed a "wall of crude" on the water waiting to arrive in key consuming regions. Oil exporters have been positioning crude in these regions to mitigate the potential impact of a prolonged supply disruption.

Meanwhile, industry crude oil stocks in Organization for Economic Cooperation and Development countries are low, and product stocks are trending sideways. Amid heightened geopolitical uncertainty, refiners—prepared to pay a premium for short-haul supply to avoid longer-term commitments—have limited their purchases of long-haul crude. Although the market is in backwardation—with the futures price lower in distant delivery months than in near delivery months—due to uncertainties, prompt supply is increasingly available.

Production IEA estimated worldwide oil production increased 740,000 b/d in March following a 2.25 million b/d increase in February. Higher output from Venezuela, Saudi Arabia, and Kuwait offset declines in Nigeria and Iraq, boosting total output from the Organization of Petroleum Exporting Countries by 95,000 b/d. Spare capacity within OPEC, excluding Iraq and Venezuela, fell to 1.23 million b/d in March, down from 1.67 million b/d a month earlier. Non-OPEC supply was up 240,000 b/d.

During March, war in Iraq suppressed production by a little more than 1 million b/d, and ethnic violence in Nigeria eroded output by 200,000 b/d. IEA reported that Venezuela, whose production is still recovering from the recent 63-day strike, saw a 490,000 b/d increase in conventional crude output and a 293,000 b/d boost in nonconventional crude output. Oil production increased 450,000 b/d in Saudi Arabia and 245,000 b/d in Kuwait.

March OPEC oil output excluding Iraq was pegged at 1.4 million b/d above current targets. When the organization met Mar. 11, it left quotas unchanged, although there has been speculation that targets would be lowered for the second quarter when demand traditionally dips. If oil output were to be cut while OECD stocks are low and concerns persist over summer gasoline supply, the industry's ability to replenish stocks could be hit.

"Industry stocks need to be rebuilt from current tight levels, and demand itself will begin to rise again from second quarter lows, potentially gaining nearly 3 million b/d by yearend. With spare capacity limited, any prolonged disruption in Iraq, Nigeria, or elsewhere would only highlight the near impossibility of sustained and effective seasonal market management," the agency said.

OECD inventories OECD commercial oil stocks fell 34 million bbl in February, ending the month down 229 million bbl from a year earlier. Forward demand cover stood at 50 days, 6 days off year-ago levels and only marginally higher than at the end of January.

OECD industry crude stocks ended February down only 1 million bbl, and North American inventories fell due to a draw in Mexico. With peak maintenance under way in the US, crude demand fell, reducing the need to build inventory. OECD product stocks fell 35 million bbl during February to 125 million bbl below year-earlier levels.

Draws were centered on distillate fuels, falling in all OECD regions. Other main product categories were little changed. In Europe, gasoline stocks built on larger refinery throughputs and contracting demand.

Contact Marilyn Radler at Marilynr@ogjonline.com.

nzoom.com-Reuters

Oil prices eased Wednesday after the US military said Iraq's oilfields could be pumping at two-thirds of pre-war levels within weeks.

US light crude in New York fell 9 cents to $US29.20 a barrel. Brent crude futures traded in London eased 10 cents to $US25.06 a barrel.

Oil prices have fallen by 30% in a month, as Middle East oil flows have suffered less disruption than feared from the war in Iraq and US ally Saudi Arabia has pumped up exports to cover for lost Iraqi supply.

Colonel Michael Morrow, adviser to US forces chief General Tommy Franks at Central Command in Qatar, told Reuters that Iraq's oilfields would be in a position to pump 1.6 million barrels per day (bpd) within eight weeks.

"Our job is to fix it, get it pumping and let the new Iraqi government decide how to handle the exports," Morrow said.

The resumption of exports could be delayed by uncertainty over who will have the legal authority to issue contracts under the United Nations oil-for-food program, which has overseen Iraq's crude exports since 1996.

"That will take a political decision," Morrow said. "And that's way above my pay grade."

Before the war, Iraq was producing 2.5 million bpd - 1.7 million bpd from its southern fields and 800,000 bpd from the north.

Iraq's northern Kirkuk oilfield was virtually untouched in the war, while the southern fields suffered some sabotage. The US military said on Tuesday that the last blazing oil well had been snuffed out. A fall in oil prices was kept in check by expectations that the Organization of the Petroleum Exporting Countries, which controls more than half the world's crude exports, would cut output at a meeting scheduled for April 24.

Opec producers who were able to do so, chiefly Saudi Arabia, have raised their output to compensate for recent outages from Iraq, Nigeria and Venezuela.

The cartel is now pumping about 2 million bpd above its agreed ceiling of 24.5 million bpd.

Opec now fears further price falls in the second quarter, as demand tails off at the end of winter in the northern hemisphere and the war in Iraq winds down with the country's oil infrastructure largely intact.

"I believe there is a glut in the market," said Opec President Abdullah al-Attiyah. "The surplus is two-plus million barrels per day."

The International Energy Agency on Wednesday urged Opec to be cautious in reducing oil supply to the West, saying prices were still too high for companies to rebuild low stocks.

"I just think Opec should be very cautious before taking strong decisions on output," said IEA chief Claude Mandil, adding that he did not expect Iraqi oil exports to resume within the next few weeks.

"Our view is there is no tidal wave of crude threatening to drown the market," Mandil said.

US crude and refined product stocks last week held at lower-than-normal levels in the run-up to summer vacation driving demand, a government report said Wednesday.

U.S. crude oil stocks rose just 100,000 barrels to 277.2 million. Energy marketanalysts polled by Reuters had forecast a build of 2.5 million barrels.

Crude stocks are still just 3% above 26-year lows hit earlier this year. Gasoline stocks fell 300,000 barrels to 201.9 million and are 6% below last year's level ahead of summer.

<a href=reuters.com>Reuters Wed April 16, 2003 08:28 AM ET

LONDON (Reuters) - Oil prices held steady on Wednesday after the U.S. military said Iraq's oilfields could be pumping at two-thirds of pre-war levels within weeks.

A question mark, however, still hangs over the return of Iraqi crude to the world market, dependent on a decision by a new political administration settling the management of exports.

Brent crude futures LCOM3 traded in London eased eight cents to $25.08 a barrel.

Colonel Michael Morrow, adviser to U.S. forces chief General Tommy Franks at Central Command in Qatar, told Reuters that Iraq's oilfields would be in a position to pump 1.6 million barrels per day (bpd) within eight weeks.

"Our job is to fix it, get it pumping and let the new Iraqi government decide how to handle the exports," Morrow said.

The resumption of exports could be delayed by uncertainty over who will have the legal authority to issue contracts under the United Nations oil-for-food program, which has overseen Iraq's crude exports since 1996.

"That will take a political decision," Morrow said. "And that's way above my pay grade."

Before the war, Iraq was producing 2.5 million bpd: 1.7 million bpd from its southern fields and 800,000 bpd from the north.

Iraq's giant northern Kirkuk oilfield was virtually untouched in the war, while the southern fields suffered some sabotage. The U.S. military said on Tuesday that the last blazing oil well had been snuffed out.

OPEC MEETING

A fall in oil prices was kept in check by expectations that the Organization of the Petroleum Exporting Countries, which controls more than half the world's crude exports, would cut output at a meeting scheduled for April 24.

OPEC producers who were able to do so, chiefly Saudi Arabia, have raised their output to compensate for recent outages from Iraq, Nigeria and Venezuela.

The cartel is now pumping about two million barrels per day (bpd) above its agreed ceiling of 24.5 million bpd.

But OPEC now fears further price falls in the second quarter, as demand tails off at the end of winter in the northern hemisphere and the war in Iraq winds down with the country's oil infrastructure largely intact.

"I believe there is a glut in the market," said OPEC President Abdullah al-Attiyah. "The surplus is two-plus million barrels per day."

"We will discuss how to manage this glut," he told reporters in Doha. "This is the main topic to be discussed."

Although ministers appear keen to cut back supply, whether this means reining in cheating or cutting back official limits remains unclear.

Further indications on the health of supply will appear later on Wednesday when the United States releases weekly oil stocks data.

Six analysts polled by Reuters predicted crude stocks grew by about one percent to nearly 280 million barrels and gasoline stocks were up 1.55 million barrels to 202.20 million.