townsvillebulletin.news.com.au 25feb03

WORLD oil prices have raced higher as the United States and its allies submitted a draft UN resolution pushing for military action to disarm Iraq. Icy temperatures in the United States and low world fuel supplies also pushed prices higher.

"There is a confluence of a lot of events that don't point to lower prices," Mike Fitzpatrick, market analyst at the Fimat brokerage house, said.

"There is the urgency of the war, the cold persists and the world inventories are still low."

New York's benchmark light sweet crude for April delivery shot up US90c to $US36.48 a barrel.

In London, the price of benchmark Brent North Sea crude oil for April delivery surged US91c to $US33.18.

Oil prices rose as US moves to disarm Iraq by force entered the final phase.

The United States, Britain and Spain submitted a draft resolution stating Iraq had failed to rid itself of weapons of mass destruction and calling on the United Nations Security Council to take action.

The US-British draft said Iraq had not co-operated fully with disarmament inspections as required under UN resolution 1441, passed on November 8.

The resolution, which will face stiff French-led opposition in the council, says the council "decides that Iraq has failed to take the final opportunity afforded to it in resolution 1441".

President George W Bush pressed for action.

"Is it going to be a body that means what it says? We certainly hope it does," Bush said.

"But one way or the other, Saddam Hussein, for the sake of peace, and for the security of the American people, will be disarmed," he said.

France put a counter-proposal to the Security Council today calling for strengthened inspections of Iraq's arsenal. Russia and Germany were co-signers of the memorandum, which does not need a vote, while China backed the proposal.

Cold weather in the United States further supported oil prices.

"Apart from the continued Iraqi uncertainty, a lot of bad weather is expected again in the States, meaning more demand, which has pushed product and crude oil prices up," said Ed and F Man trader Graham Flint in London.

Traders said a strike in Venezuela's oil industry was still propping up prices, although export shipments recovered partially.

The head of Venezuela's state-run oil company PDVSA, Ali Rodriguez, said Venezuela was now producing 2.06 million barrels of oil a day, which it hoped to boost to 2.5 million this week.

GNI-Man Financial analyst Lawrence Eagles said the Venezuelan opposition had on Friday estimated Venezuelan output at 1.515 million barrels per day.

"Whatever the actual level of output, it is clear that output and shipments are increasing, and this should ease the pressure on the world market if there is a war with Iraq," he said in London.

The slew of political and market concerns outweighed a statement from Iran that the Organisation of Petroleum Exporting Countries (OPEC) should avoid cutting production at its next meeting on March 11.

Asked about the possibility of an output cut from the present level of 24.5 million barrels a day, Iranian Oil Minister Bijan Namdar Zangeneh said: "I don't think so. The current situation in the region is abnormal both from a political and military point of view."

www.theaustralian.news.com.au

February 25, 2003

WORLD oil prices have raced higher as the United States and its allies submitted a draft UN resolution pushing for military action to disarm Iraq.

Icy temperatures in the United States and low world fuel supplies also pushed prices higher.

"There is a confluence of a lot of events that don't point to lower prices," Mike Fitzpatrick, market analyst at the Fimat brokerage house, said.

"There is the urgency of the war, the cold persists and the world inventories are still low."

New York's benchmark light sweet crude for April delivery shot up US90c to $US36.48 a barrel.

In London, the price of benchmark Brent North Sea crude oil for April delivery surged US91c to $US33.18.

Oil prices rose as US moves to disarm Iraq by force entered the final phase.

The United States, Britain and Spain submitted a draft resolution stating Iraq had failed to rid itself of weapons of mass destruction and calling on the United Nations Security Council to take action.

The US-British draft said Iraq had not co-operated fully with disarmament inspections as required under UN resolution 1441, passed on November 8.

The resolution, which will face stiff French-led opposition in the council, says the council "decides that Iraq has failed to take the final opportunity afforded to it in resolution 1441".

President George W Bush pressed for action.

"Is it going to be a body that means what it says? We certainly hope it does," Bush said.

"But one way or the other, Saddam Hussein, for the sake of peace, and for the security of the American people, will be disarmed," he said.

France put a counter-proposal to the Security Council today calling for strengthened inspections of Iraq's arsenal. Russia and Germany were co-signers of the memorandum, which does not need a vote, while China backed the proposal.

Cold weather in the United States further supported oil prices.

"Apart from the continued Iraqi uncertainty, a lot of bad weather is expected again in the States, meaning more demand, which has pushed product and crude oil prices up," said Ed and F Man trader Graham Flint in London.

Traders said a strike in Venezuela's oil industry was still propping up prices, although export shipments recovered partially.

The head of Venezuela's state-run oil company PDVSA, Ali Rodriguez, said Venezuela was now producing 2.06 million barrels of oil a day, which it hoped to boost to 2.5 million this week.

GNI-Man Financial analyst Lawrence Eagles said the Venezuelan opposition had on Friday estimated Venezuelan output at 1.515 million barrels per day.

"Whatever the actual level of output, it is clear that output and shipments are increasing, and this should ease the pressure on the world market if there is a war with Iraq," he said in London.

The slew of political and market concerns outweighed a statement from Iran that the Organisation of Petroleum Exporting Countries (OPEC) should avoid cutting production at its next meeting on March 11.

Asked about the possibility of an output cut from the present level of 24.5 million barrels a day, Iranian Oil Minister Bijan Namdar Zangeneh said: "I don't think so. The current situation in the region is abnormal both from a political and military point of view."

www.usatoday.com Posted 2/24/2003 5:15 PM

NEW YORK (AP) — Crude oil futures rallied again Monday, boosted by record intraday prices for heating oil and continued fears about war in Iraq.

Natural gas futures also surged on a blast of cold air that is seen boosting heating demand into next week in a market already worried by tumbling gas supplies.

On the New York Mercantile Exchange, the front-month March heating oil contract climbed to a record of $1.1535 a gallon, surpassing the previous all-time high of $1.15, set in November 1979. The contract closed at $1.1467 a gallon.

The rally gave the rest of the petroleum complex a lift. Nearby April crude rose 90 cents to close at $36.48 a barrel. March gasoline settled at $1.0475 a gallon, up 3.47 cents on the day.

Across the Atlantic on London's International Petroleum Exchange, the gains were just as strong. Nearby April North Sea Brent futures closed up 88 cents at $33.15 a barrel.

"The crude oil market continues to trend higher, pulled along by a strong heating oil market and the continued drumbeat for war with Iraq," said Tim Evans, senior energy analyst at research firm IFR Pegasus in New York.

The heating oil surge mirrored a rally in natural gas futures, which climbed to 25-month highs on forecasts of cold weather and expectations of a sharp drawdown in storage. The March contract shot up $2.531, or 38%, to settle at $9.137 per 1,000 cubic feet.

"What's concerning the market today is that the weather is not giving us any signs of spring," said Phil Flynn, a trader and analyst at Alaron Trading Corp.

Although heating oil's climb to record territory was part of the reason for Monday's rally, the market's main focus remained Iraq, analysts said.

War jitters heightened after the U.S., the U.K. and Spain introduced a U.N. Security Council resolution today that finds Iraq in breach of its disarmament obligations and warns the rogue nation of "serious consequences."

The resolution says that Iraq has failed to "take the final opportunity" afforded it to disarm.

"People view that as another step toward war," said Tom Bentz, an analyst at BNP Paribas Futures.

Traders worry that an attack will result in a disruption of Iraqi oil exports and cause a supply disruption in the Middle East, the world's principal source of oil.

Western officials say they expect a vote on the resolution within the next two weeks.

But approval is far from guaranteed. Earlier Monday, key U.N. Security Council members France, Germany and Russia submitted an alternative proposal for step-by-step disarmament of Iraq

Despite the opposition, however, the U.S. has said it is prepared to lead an attack on Iraq without a new resolution.

With the market's focus on Iraq, traders shrugged off news of continued increases in Venezuelan oil output.

On Sunday, state oil company President Ali Rodriguez said Venezuelan crude oil output, crippled by a strike in December and January, has risen to more than 2 million barrels a day.

Before the strike, Venezuela exported about 3.1 million barrels a day of crude oil.

www.quicken.com Monday, Febuary 24, 2003 04:11 PM ET   Dow Jones Newswires

NEW YORK -- Crude oil futures rallied again Monday, boosted by record heating oil prices and continued fears about war in Iraq.

Heating oil led the way. On the New York Mercantile Exchange, the front-month March heating oil contract climbed to a new record high of $1.1535 a gallon, surpassing the previous all-time high of $1.15, set in November 1979. The contract closed at $1.1467 a gallon.

The rally gave the rest of the petroleum complex a lift. Nearby April crude rose 90 cents to close at $36.48 a barrel. March gasoline settled at $1.0475 a gallon, up 3.47 cents on the day.

Across the Atlantic on London's International Petroleum Exchange, the gains were just as strong.

Nearby April North Sea Brent futures closed up 88 cents at $33.15 a barrel.

March gasoil futures jumped $12.25 to close at $315.25 a metric ton, a 27- month high.

"The crude oil market continues to trend higher, pulled along by a strong heating oil market and the continued drumbeat for war with Iraq," said Tim Evans, senior energy analyst at research firm IFR Pegasus in New York.

The heating oil surge mirrored a rally in natural gas futures, which climbed to 25-month highs on forecasts of cold weather and expectations of a sharp drawdown in storage.

"What's concerning the market today is that the weather is not giving us any signs of spring," said Phil Flynn, a trader and analyst at Alaron Trading Corp.

Although heating oil's climb to record territory was part of the reason for Monday's rally, the market's main focus remained Iraq, analysts said.

War jitters heightened after the U.S., the United Kingdom and Spain introduced a United Nations Security Council resolution Monday that finds Iraq in breach of its disarmament obligations and warns the rogue nation of "serious consequences."

The resolution says that Iraq has failed to "take the final opportunity" afforded it to disarm.

"People view that as another step toward war," said Tom Bentz, an analyst at BNP Paribas Futures.

Traders worry that an attack will result in a disruption of Iraqi oil exports and cause a supply disruption in the Middle East, the world's principal source of oil.

Western officials say they expect a vote on the resolution within the next two weeks.

But approval is far from guaranteed. Earlier Monday, key U.N. Security Council members France, Germany and Russia submitted an alternative proposal for step-by-step disarmament of Iraq

Despite the opposition, however, the U.S. has said it is prepared to lead an attack on Iraq without a new resolution.

With the market's focus on Iraq, traders shrugged off news of continued increases in Venezuelan oil output.

On Sunday, state oil company President Ali Rodriguez said Venezuelan crude oil output, crippled by a strike in December and January, has risen to more than two million barrels a day.

Before the strike, Venezuela exported about 3.1 million barrels a day of crude oil.

With output on the rise, state monopoly Petroleos de Venezuela SA, known as PdVSA, will partially lift a force majeure on exports, a company source said.

sg.biz.yahoo.com Tuesday February 25, 12:17 AM By David Gautier-Villars Of DOW JONES NEWSWIRES

PARIS (Dow Jones)--Of all the weapons that may be deployed in an Iraqi conflict, Klaus-Dietmar Jacoby has the one that will be the least noticed if used successfully.

In a drawer in his Paris office sits a brown plastic notebook containing hundreds of names and numbers of staff at refineries, oil terminals and governments around the world.

If a war in Iraq blows a hole in the world's supply of crude oil, Jacoby, the head of emergency planning at the International Energy Agency, will turn to his notebook to help keep disruption to a minimum.

His job is to gauge where the shortfall will hit hardest. Based on information from Jacoby, the IEA, the watchdog of the strategic oil stockpile for the 26 oil-thirsty members of the Organization of Economic Cooperation and Development, would then decide whether to intervene by releasing reserves.

"We are ready," Jacoby says in his office overlooking the Eiffel Tower. "We've simplified our emergency procedures and if there is a serious supply shortage, we could intervene within 48 hours, even faster if needed."

That's swift compared to 1974, when the IEA was created as a counterweight to the Organization of the Petroleum Exporting Countries. Back then, weeks or even months were thought necessary to act.

In those days, the agency's main weapon against a supply disruption was an intricate reallocation system under which the IEA attempted to spread the pain. The agency would solicit help from private companies and governments for members most affected by a shortage of oil.

If no one volunteered, the IEA would enforce a mandatory sharing system.

"That was bloody complicated," says Nick Tydd, who represents BP PLC (BP) on the IEA's Industry Advisory Board. "And it soon became clear that circumstances had changed significantly since the early days of the IEA and the market would now share the oil far more quickly and more efficiently than any mechanical allocation system."

To keep pace, the IEA introduced a mechanism in 1984 to make oil available to the market more efficiently.

Instead of itself trying to match users and suppliers, it signals where oil is available. If it so chooses, the agency can require members to make part of their oil reserves - equivalent to at least 90 days of net imports - available to the market.

The IEA used the mechanism, rather than the older reallocation system, during the Gulf War in January 1991, the only time it intervened in the market. The move released 2.5 million barrels of oil a day for 30 days.

The move cooled prices and only some of the oil reserves were actually needed, but traders still criticized the agency for taking six months to release stocks, long after Iraq had invaded Kuwait.

Jacoby, who wasn't in his job at the time, says the IEA was right to avoid a knee-jerk reaction. "We couldn't anticipate how long the war would last," he says. "The oil reserves are stored as a last resort, like emergency rations."

BP's Tydd says the agency's mistake was that it failed to communicate enough with the world. "It's important to have a contingency plan in place, but it's even more important to make sure people are aware of it."

Jacoby reckons the oil markets' difficulty was in predicting how the IEA would react to a crisis. In response, the agency has simplified its procedures and improved its visibility, he says.

A year ago, the agency locked 100 oil experts in a room in Paris for a dummy run to test its ability to coordinate with the industry and swiftly release oil reserves. Oil executives, civil servants and traders reacted to a hypothetical major supply disruption after anthrax had been detected at Ras Tanura, the world's largest oil terminal in Saudi Arabia.

Industry participants said the trial helped them understand how the IEA works.

To become more transparent, the IEA provided details last year on the volume of oil it can easily inject into the market. In the event of a supply outage, the agency could draw down its reserves at a maximum rate of 12.9 million barrels a day for a month.

The rate would fall progressively and member governments' reserves would be almost exhausted after eight months.

That figure should more than offset the sudden loss of Iraqi's average daily exports of around 1.8 million barrels, but the oil markets remain jittery.

"It's reassuring to hear the IEA saying it can cope with a crisis," says Regis Collieux, a senior oil expert at BNP Paribas' energy and commodities arm. "But one cannot rule out a malfunction in the system or a mismanagement problem."

Collieux says he is concerned that OPEC countries, excluding Iraq and Venezuela, only have the capacity to add 2.3 million barrels a day to the market.

"If there was another crisis on top of Iraq, we would be testing the limits of the system," he says. "The ice would be very thin."

-By David Gauthier-Villars, Dow Jones Newswires; 33 (0)1 40 1717 40; david.gauthier-villars@dowjones.com