asia.reuters.com Mon January 27, 2003 12:34 PM ET By Richard Mably

LONDON (Reuters) - Oil prices fell on Monday as U.N. Secretary-General Kofi Annan called for more time for weapons inspectors to search Iraq before the United States makes a final decision on going to war.

U.S. light crude CLc1 slipped 93 cents to $32.25 a barrel and London Brent LCOc1 dipped 59 cents to $30.05 a barrel.

Chief U.N. weapons inspector Hans Blix on Monday delivered his first full report to the U.N. Security Council on Iraq's cooperation with arms inspectors.

He said: "Iraq appears not to have come to genuine acceptance, not even today, of the disarmament that was demanded of it."

Annan called for more time for the inspections which have been running since late November.

"If they need time, they should be given the time to do their work," Annan told reporters. Arms experts should be given a "reasonable amount of time," he added.

European and Middle Eastern allies are pushing the United States to allow the inspectors more time, possibly until March 1, officials and former policy makers told Reuters at the World Economic Forum in Davos, Switzerland. "What's driving the timetable for war is not diplomacy but military readiness," said Roger Diwan of consultancy PFC Energy in Washington.

"If the U.S. needs more time to get the military in place it will use that time to seek diplomatic backing but, whether it gets that or not, we still expect war to start some time between the middle of February and early March."

Blix said that documents Iraq submitted in a 12,000-page declaration had not answered questions on the whereabouts of the deadly VX nerve gas, two tons of nutrients or growth media for biological agents, such as anthrax, and 550 artillery shells filled with mustard gas and 6,500 chemical bombs.

And despite assurances from Iraq that it would encourage its scientists to submit to private interviews, no such talks have taken place and Baghdad had blocked the use of U-2 surveillance flights over all parts of Iraq.

At the same time the inspectors had not found evidence of banned activity or production facilities at any of the sites investigated that the United States says exist.

STATE OF THE UNION

Attention now will turn to President Bush's State of the Union address on Tuesday. Bush is then due to meet key ally Britain's Prime Minister Tony Blair later this week. Britain has sent thousands of troops to join a U.S. military build-up in the Gulf.

The world's biggest oil exporter Saudi Arabia, said at the weekend that it and fellow OPEC members were pumping sufficient volumes to prevent shortages.

Traders fear an attack on Iraq might coincide with the ongoing strike in Venezuela, which has cut exports from the world's fifth-biggest exporter.

"There is no shortage in the market and there should be no reason for prices where they are today," Saudi Oil Minister Ali al-Naimi told a panel at the World Economic Forum in Davos.

"We checked. We called. I checked with individual customers, refineries and others. I ask them one question: Do you feel you need more oil? And the answer is no," he said.

OPEC agreed two weeks ago to raise output by 1.5 million barrels per day to counter some of the shortfall caused by a nationwide strike in Venezuela.

Venezuela's President Hugo Chavez hinted at the weekend that he may be forced to take up arms if he were defeated by the opposition movement, which is calling for Chavez to step down.

Venezuelan crude output has recovered from lows in December and strikers said on Monday production was about 966,000 bpd, 29 percent of pre-strike levels. Chavez claims production has reached 1.32 million bpd.

ogj.pennnet.com   By OGJ editors HOUSTON, Jan. 27 -- Oil futures prices soared on New York and London markets Friday upon rising jitters between the US and Iraq about a possible war in Iraq and also upon lingering concerns about Venezuela's national strike as well as world oil supplies.

United Nations inspectors have searched Iraq for 2 months looking for evidence of banned weapons of mass destruction. Chief UN Weapons Inspector Hans Blix was scheduled Monday to present his findings to the UN Security Council.

Iraq was expected to be a main topic in the State of the Union address that US President George W. Bush will deliver Tuesday.

On Friday, a US military spokesman said that the military plans to quickly take control of Iraq's oil fields if war ensures, saying President Saddam Hussein plans to try to destroy his own country's oil wells just as he attempted to destroy Kuwait's oil wells in 1991.

A senior US defense official, speaking on condition of anonymity, told a Pentagon briefing that "intelligence sources" indicate that Saddam intends to target the oil fields. The official did not elaborate on the intelligence information.

Meanwhile, Qatari Energy and Industry Minister Abdullah bin Hamad Al Attiyah, current OPEC conference president, said the Organization of Petroleum Exporting Countries always has acted rationally to stabilize oil markets, OPEC News Agency reported.

"Despite all the problems that OPEC has faced, it has always managed to overcome them and helped restore a balance between supply and demand in order to maintain stability of oil prices in the international oil market," he told reporters Monday while attending a World Economic Forum in Switzerland.

The March contract for benchmark US light, sweet crudes soared by $1.03 to $33.28/bbl Friday on the New York Mercantile Exchange, while the April position gained 77¢ to $32.16/bbl. Heating oil for February delivery gained 3.49¢ to 95.02¢/gal. Unleaded gasoline for the same month rose 2.44¢ to 92.25¢/gal.

The February natural gas gained 6.6¢ to $5.52/Mcf Friday as cold weather covered most of the US east of the Rocky Mountains. Uncertainty regarding weather forecasts kept natural gas prices high last week, said analysts at Enerfax Daily. The February natural gas contract expires Wednesday.

In London, the March contract for North Sea Brent crude also rose sharply, gaining 77¢ to $30.49/bbl on the International Petroleum Exchange. The February natural gas contract climbed as well, up 11.65¢ to the equivalent of $3.07/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes gained 38¢ Friday to $30.56/bbl.

www.thekcrachannel.com

POSTED: 10:11 a.m. EST January 27, 2003

Gas prices are up, an analyst says, at least in part on fears of a war on Iraq.

The cost of a gallon has risen nearly 1.5 cents over the past two weeks, according to analyst Trilby Lundberg.

The average weighted price for gas nationwide, including all grades and taxes, is about $1.52, according to the Lundberg Survey of 8,000 stations.

Along with the Iraq situation, the general strike in Venezuela is contributing to the increase, as is the intense cold on the East Coast, which is prompting some refiners to produce more heating oil.

AAA's analysis says that the average price for a gallon of unleaded gas is $1.47, almost six cents higher than a month ago, and 25 cents higher than a year ago.

www.middle-east-online.com First Published 2003-01-27, Last Updated 2003-01-27 13:18:43

Traders worry about high probability Washington might go it alone in Iraq despite split with key UN members.

LONDON - Oil prices bubbled up Monday as concerns about possible disruption to Middle East supplies mounted ahead of a key report by UN weapons inspectors on Iraq, which traders feared could trigger a US-led Gulf war.

The price of benchmark Brent North Sea crude oil for March delivery rose to 30.60 dollars per barrel in early trading from 30.49 dollars at the close of trading on Friday, when prices had climbed by 77 cents.

In New York, light sweet crude March-dated futures rallied by 1.03 dollars per barrel on Friday to 33.28 dollars.

Prices climbed again as UN arms inspectors prepared to deliver a report to the UN Security Council later Monday on their two months of work hunting down alleged weapons of mass destruction in Iraq.

Amid signs of a split between the United States and other members of the UN Security Council such as France and Russia, traders were worried that the US administration might wage a solo war on Iraq.

"Although everybody is waiting for the weapons inspectors to make their report... the contents seem widely anticipated," said Prudential Bache trader Christopher Bellew.

"It seems likely that the UN is going to give the arms inspectors more time. There is still a very high probability that there could be military intervention by the Americans, and that keeps prices higher at the moment," he added.

Analysts say that the oil market is already suffering a shortage of oil, largely because of a strike in Venezuela that has sent the country's oil output down to a fraction of its usual levels of about three million barrels per day.

Despite recent signs that the stoppages are easing somewhat, the disruption has drained US commercial stocks of crude oil down to uncomfortably low levels for the world's biggest oil consumer.

Against that backdrop, prices have remained high despite the promise of an output increase by the Organisation of Petroleum Exporting Countries (OPEC) of 1.5 million barrels per day, which officially starts next month but has already started flowing, according to experts.

If the market loses Iraq's oil output of about two million barrels per day while Venezuela's exports are crimped, OPEC might not be able to keep a lid on prices, analysts say.

"With US crude stock levels at 27-year lows and OPEC spare capacity looking extremely thin, armed conflict in the Gulf is approaching at a time when the market could hardly be more sensitive to supply disruptions," said Barclays Capital head of research Kevin Norrish.

But he said that any oil price spike was likely to be short-lived and restricted to the period just before war.

"The release of US strategic reserves should limit its extent, while a seasonal slowing of demand combined with strong non-OPEC supply growth will then provide the conditions for substantially lower prices in the second quarter," he wrote in a note to clients.

Venezuela's crude output is now close to a million barrels per day, striking managers of the Petroleos de Venezuela state oil firm said Saturday.

The government has put the figure at more than one million barrels, saying most of the production was being exported.

www.forbes.com Reuters, 01.27.03, 5:45 AM ET

In the LONDON story headlined "Oil edges higher ahead of Blix report" in the third paragraph please read ...1530 GMT (1030 local time)... and not ...1030 GMT (1030 local time)... (corrects time). A corrected repetition follows.

LONDON, Jan 27 (Reuters) - Strong oil prices held ground on Monday, awaiting a report from U.N. weapons inspectors for clues to the likelihood of war in Iraq.

U.S. light crude rose two cents to $33.30 a barrel, extending Friday's gains of more than $1 in New York. London Brent added 13 cents to $30.62 a barrel.

Chief U.N. weapons inspector Hans Blix at 1530 GMT (1030 local time) on Monday will deliver his first full report to the U.N. Security Council on Iraq's 12,000-page weapons declaration and Baghdad's cooperation with arms inspectors.

Blix said he would report that Baghdad has not submitted a full account and is also expected to say that it has hampered interviews with Iraqi scientists and blocked the use of U-2 surveillance flights over all parts of Iraq.

Blix told reporters that when questions arise about anthrax, the deadly VX nerve gas or Scud missiles, the Iraqis "simply say there is nothing left of this, and there is no evidence that we can view, there are no more documents."

U.S. President George W. Bush will make a State of Union address on Tuesday and is due to meet key ally Britain's Prime Minister Tony Blair later this week. Britain has sent thousands of troops to join a U.S. military build-up in the Gulf.

"Each of these stages will provide further clarity and we can expect a timetable to war to become a little clearer," said Sydney-based independent oil analyst Simon Games-Thomas.

Washington has made it clear it is ready to attack Iraq alone if needed.

U.S. secretary of State Colin Powell said at the weekend that time was running out for Baghdad to disarm voluntarily.

"We will not shrink from war if that is the only way to rid Iraq of its weapons of mass destruction," Powell said at the World Economic Forum (WEF) in Davos, Switzerland.

SAUDI SAYS NO SHORTAGE The world's biggest oil exporter Saudi Arabia, said at the weekend that it and fellow OPEC members were pumping sufficient volumes to prevent shortages on world markets.

Oil prices are near two-year highs on concerns that an attack on Iraq might coincide with the ongoing strike in Venezuela, which has strangled exports from the world's fifth-biggest exporter.

"There is no shortage in the market and there should be no reason for prices where they are today," Saudi Oil Minister Ali al-Naimi told a panel in Davos.

"We checked. We called. I checked with individual customers, refineries and others. I ask them one question: Do you feel you need more oil? And the answer is no," he said.

The Organisation of the Petroleum Exporting Countries agreed two weeks ago to raise output by 1.5 million barrels per day to counter some of the shortfall caused by a nationwide strike in Venezuela. Venezuela's President Hugo Chavez hinted at the weekend that he may be forced to take up arms if he were defeated by the opposition movement, which is calling for Chavez to step down.

Venezuelan crude output has recovered from lows in December when it was running at a trickle of about 150,000 bpd against more than three million bpd before the strike, which started on December 2.

Strikers said on Sunday that production was about 986,000 bpd, 30 percent of pre-strike levels, while Chavez claimed production had reached 1.32 million bpd.