Market watch: Crude oil futures soar on Iraqi, Venezuelan concerns

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Dec. 19 -- Crude oil futures prices spiraled to the highest level in almost 3 months on New York and London markets briefly Wednesday, jumping above $31/bbl in the US and reaching $29/bbl in London but both markets retreated by the day's close.

The January contract for benchmark US sweet, light crudes hit $31.25/bbl during trading on NYMEX Wednesday before the contract settled at $30.44/bbl, which was up 34¢ from Tuesday's closing price.

The NYMEX contract for February delivery peaked at $31.10/bbl Wednesday, but it then slipped to close at $30.43/bbl, which still was up 48¢ from Tuesday's close.

Traders attributed the price movements to expectations that a US attack on Iraq appears more likely and also to concerns about a potential price shock as Venezuela's general strike drags on and reduces that country's oil exports.

Meanwhile, a White House spokesman Wednesday said that US President George W. Bush has no immediate plans to tap into the Strategic Petroleum Reserve to boost supplies during Venezuela's strike.

"Obviously, we're going to continue to monitor the situation very closely. . . . But at this time, we do not think a release is necessary," White House spokesman Ari Fleischer told reporters in Washington, DC. Meanwhile, the US Department of Energy is allowing oil companies to delay delivering 8 million bbl of crude to the SPR.

The White House has said serious omissions and problems exist with Iraq's weapons declaration although Bush later decided the alleged violation of a United Nations resolution is not an immediate cause for war.

Chief UN inspector Hans Blix was slated to give a preliminary assessment of the Iraqi report during a closed session before the UN Security Council Thursday. Iraq denies having weapons of mass destruction. But Bush and British Prime Minister Tony Blair both have called the Iraqi declaration incomplete.

Unleaded gasoline for January delivery rose 2.15¢ to 87.54¢/gal. Heating oil for the same month also closed higher, rising 1.58¢ to 85.53¢/gal.

The January natural gas contract climbed by 3.8¢ to $5.28/Mcf on NYMEX.

In London, the February contract for North Sea Brent oil rose 57¢ to settle at $28.49/bbl on the International Petroleum Exchange. The day's high was $29/bbl and the low was $27.55/bbl. The January natural gas contract dipped 4.1¢ to the equivalent of $3.90/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 36¢ to $29.12/bbl Wednesday, marking the third consecutive day that the basket price has been above the $22-28/bbl price band.

Contact Paula Dittrick at paulad@ogjonline.com

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