www.chron.com Feb. 26, 2003, 1:20PM Reuters News Service

NEW YORK - U.S. crude oil futures today hit their highest level since the Gulf War after a government report showed heavy drawdowns in U.S. distillate and gasoline stocks last week.

New York Mercantile Exchange (NYMEX) crude for April delivery shot up to $37.93 a barrel, gaining $1.87, surpassing a $37.80 peak hit in September 2000. Prices are at the highest level since the Gulf War during which NYMEX crude shot up to an all time high of $41.15.

Oil prices have gained 70 percent since the same time last year on fears of war in Iraq and a 12-week oil strike in Venezuela that has run down U.S. energy stocks.

www.omaha.com Published Wednesday February 26, 2003

LONDON - OPEC, supplier of one-third of the world's oil, may wait until the third quarter to reduce output because of rising prices and dwindling U.S. inventories, the group's president said Wednesday.

OPEC will not change the output at its March 11 meeting, said Abdullah bin Hamad al-Attiyah, who is also the oil minister for Qatar. "We believe now the oil price is very high and demand is on the high side," he said.

The Organization of the Petroleum Exporting Countries will meet in Vienna to consider oil quotas for the second quarter.

Oil prices in London have surged 56 percent in the past year to more than $32 a barrel as a strike in Venezuela sent U.S. inventories to a 28-year low and concern increased of an attack on Iraq.

The OPEC president has reversed course, after saying Feb. 3 that members probably will have to lower sales.

Forecasters such as the International Energy Agency have since lifted their oil-demand estimates for that period, in part because of a colder-than-normal winter in the U.S and Europe.

Analysts expect any U.S.-led attack on Iraq to take place within weeks.

Oil prices are inflated by as much as $6 a barrel on concern of war, and the group may consider trimming supply during the third quarter to avert a glut, al-Attiyah said Wednesday.

"I am very concerned about the third quarter," he said. "I believe that OPEC will come again to talk about how to cut production."

The minister visited London this week to attend an energy conference and also met British government officials.

OPEC won't halt oil sales to protest U.S. aggression against Iraq, al-Attiyah reiterated.

money.cnn.com February 26, 2003: 4:33 PM EST

Prices rally after government report shows decline in heating fuel stocks on cold weather.

NEW YORK (Reuters) - U.S. oil prices hit their highest mark since the Gulf War on Wednesday after the U.S. government reported a big drop in winter heating fuel stocks as Washington continued to press its case for war against Iraq.

The Department of Energy said supplies of heating oil in the week to Feb. 21 fell 3.9 million barrels to 36.1 million barrels, a dangerous 33 percent deficit from a year ago as cold weather buffets the Northeast.

The news pushed U.S. light crude to a new post Gulf War high of $37.93 a barrel -- within reach the all-time high of $41.15 hit in October 1990 -- before settling at $37.70 a barrel, up $1.64 on the day.

London Brent crude gained 75 cents to $33.07 a barrel.

"For short-term trading targets there's really not much holding this market back from $40 a barrel," said Paul Horsnell, oil analyst at J.P. Morgan. "These latest inventory figures are scary. We must now be getting very close to localized physical shortages."

The U.S. inventory slump has reinforced the impact on oil prices of a bout of colder-than-normal winter weather in the world's biggest energy consuming nation.

Weather watchers are calling for continued abnormally low temperatures in the Northeastern U.S., the world's largest heating oil market, through the coming weekend, adding more pressure to thin stockpiles.

U.S. importers are also without large volumes of refined products from Venezuela where an anti-government strike has kept big refineries idled since early December.

Oil is already priced at a premium due to fears that a U.S. attack on Iraq, the world's eighth largest oil exporter, will stop Baghdad's shipments and possibly hit other supplies from the Middle East, the source of 40 percent of global crude trade.

PAVING THE WAY FOR WAR

The United States said Wednesday it doubted either Russia or China would veto a new U.N. Security Council resolution designed to pave the way for war.

The comments, made by a senior U.S. administration official speaking on condition of anonymity, seemed to improve prospects for the resolution, although questions remained over the nine council votes it needs to pass and a possible French veto.

Chief U.N. weapons inspector Hans Blix said that Iraq had not yet made a "fundamental decision to disarm," and still fell short of full cooperation with U.N. disarmament demands.

Blix, readying another report to the Security Council, told reporters he thought Iraq had stepped up its efforts to release documents and other data as required by United Nations resolutions.

But he also said, "Full cooperation or a breakthrough, no? I don't think you can say that. We have a very long list of disarmament issues and it will require a big effort in order to clarify all of those."

"I do not think I can say there is evidence of a fundamental decision (to disarm), but there is some evidence of some increased activity," he said.

U.S. oil stockpiles data released on Wednesday countered earlier comments from Washington that it was ready to release government strategic reserves quickly if it judges that a war in Iraq is causing a severe supply disruption.

U.S. Secretary of Energy Spencer Abraham said on Tuesday he would release crude from the 600-million-barrel national reserve if supplies suffer a heavy cut due to war.

But Washington has yet to make clear whether it thinks a stoppage of Iraq's 1.7 million barrels per day of exports would be sufficient to warrant a release. OPEC has said it has enough spare capacity to cover any Iraqi outage.

Oil from the emergency reserve was last released in September 2000, when thin stockpiles boosted prices to $37.80 a barrel. SPR oil was also released during the Gulf War.  

abcnews.go.com — By Jonathan Landreth

SINGAPORE (Reuters) - Oil prices rose on Wednesday bolstered by fears that war in Iraq would cut world supplies already thinned by a Venezuelan strike and strong U.S. demand for winter heating.

U.S. data later on Wednesday is forecast to show that heating fuel stocks declined last week, reinforcing the impact of a bout of below-normal cold weather in the world's biggest energy consuming nation.

The data is expected to partly offset comments on Tuesday from Washington that it would quickly release strategic oil reserves if a war in Iraq disrupted supplies.

Oil markets fear a U.S. attack on Iraq, the world's eighth largest oil exporter, could slash oil shipments from the Middle East, which supplies about 40 percent of the global crude trade.

"The market expects a war sooner rather than later," said John Hirjee, senior energy analyst at Deutsche Bank in Melbourne.

U.S. light crude was up 22 cents at $36.28 a barrel at 2 a.m. EST, recovering some of the 42 cents lost in New York on Tuesday.

U.S. March heating oil, which rose to a record high of $1.18 a gallon on Tuesday, was up 0.98 cent at $1.1324 compared with New York's close.

New York oil prices have risen some 45 percent since November after a strike stunted exports from key oil supplier Venezuela and cold temperatures eroded domestic fuel supplies.

Iraq offered U.N. arms inspectors on Tuesday documents on past arms programs, but President Bush pressed his case for nothing less than full disarmament.

Bush emphasized he would bypass the United Nations and attack Iraq if necessary, saying approval of a new U.N. resolution was not essential.

U.S. government supply data is expected to show distillates stocks fell last week by 2.6 million barrels, or about 2.5 percent.

"Feeding supply fears is the cold weather in the United States," Hirjee said.

Heating demand could continue to bolster fears of supply shortages since temperatures in the U.S. Northeast, the world's biggest heating-oil market, are forecast to be below seasonal norms this week.

However, Secretary of Energy, Spencer Abraham, said the U.S. would quickly release stock from its 600-million-barrel strategic oil reserve if supplies were disrupted by a war in Iraq.

"We will and can act quickly to use the Strategic Petroleum Reserve to fortify efforts by producers to offset any severe disruption, if it is needed," Abraham told lawmakers at a Senate Energy Committee hearing.

Wednesday's inventory report also is expected to show a small drop in gasoline supplies and a one-million-barrel rise in crude oil stocks.

english.eastday.com

OPEC president says oil prices are inflated by war concern OIL consumers worldwide have enough supplies to meet demand, the OPEC president said on Monday, adding that prices are inflated by traders' concern that a war with Iraq will disrupt shipments.

"The answer from our customers is they don't see the need for more oil now," Abdullah bin Hamad al-Attiyah, the OPEC president and Qatari oil minister, told reporters in London, where he was attending an oil conference. Oil prices are inflated by at least US$5 a barrel because of war concern, he said.

The Organization of Petroleum Exporting Countries, which pumps a third of the world's oil, meets on March 11 to consider oil quotas for the second quarter, when demand will slow because of the end of the Northern Hemisphere winter. Oil prices in London have surged 65 percent in the past year to US$32.92 a barrel.

The OPEC president said ministers would discuss at next month's meeting in Vienna whether to suspend production quotas temporarily to boost supplies should Iraqi oil output be halted because of a U.S.-led attack, among other scenarios.

"We will meet in March and we will discuss it," he said. "We will discuss all options."

Last week, OPEC officials said the group may suspend quotas in the event Iraq's exports are cut off by an attack.

The country produces about 3.2 percent of the world's oil.

OPEC raised its output target by 6.5 percent, or 1.5 million barrels a day, starting February 1, in an effort to lower prices, which have surged on concern of an attack on Iraq and a strike in Venezuela.

The group, except Iraq, restrains oil output to keep its oil-price benchmark between US$22 a barrel and US$28. The price has stayed above the range since December 16.

Iraq has no quota as its trade is under UN oversight.

OPEC will consider implementing an informal accord to raise quotas by at least 500,000 barrels a day should the oil benchmark stay above US$28 a barrel for 20 consecutive trading days, al-Attiyah said. The 20th day would be this Friday.

The agreement "can be triggered," though ministers may decide to wait until they meet before taking any decision on changing quotas, the minister said.