By OGJ editors
HOUSTON, Nov. 13 -- Crude oil futures prices dropped slightly Tuesday worldwide upon traders' expectations of a moderate rise in US crude oil stocks and also upon uncertainty regarding Iraq's answer to the United Nations' arms inspection resolution.
After markets closed Tuesday, the American Petroleum Institute's weekly inventory report showed crude stocks fell unexpectedly by 7.2 million bbl last week. Analysts, who had predicted a modest rise, attributed the drop to the shutdown of the trans-Alaska pipeline Nov. 3-6, following a Nov. 3 earthquake (OGJ Online, Nov. 6, 2002).
Traders and analysts now await the US oil inventory data from the US Energy Information Administration on Thursday. That report is one day late this week because of the Veteran's Day holiday Monday.
Meanwhile, oil price dips and spikes were likely prior to and perhaps following Iraqi President Saddam Hussein's decision to accept the UN Security Council resolution demanding that UN weapons inspectors be allowed unrestricted access to suspected production sites for weapons of mass destruction.
The Iraqi Parliament had objected to the language of the resolution at an earlier meeting, rejecting it unanimously, but on Wednesday, Reuters reported that Iraq's ambassador to the UN, Mohammed Aldouri, said his country unconditionally accepted the resolution and awaits the arrival of weapons inspectors.
Hussein had a Friday deadline, but prior to the decision, market observers generally believed that any clear indication as to when to expect probable military action to the Iraq-US standoff would take several weeks, or perhaps months.
Merrill Lynch analyst Michael Rothman had said military action seemed likely..
"We're getting a sense that the US intelligence community houses a deep-seated fear about the actual effectiveness of a new inspection regime given the prospects that the last 2 years?were used by Iraq's government to move and hide materials. There's a sense that Saddam might willingly offer access to all presidential palaces?leaving inspectors to find little more than their shadows. Perhaps this fear that Iraq will be able to manipulate new inspections is part of the bearishness in this market. At this juncture, however, we're skeptical about Iraq 'getting off the hook' given our sense about the (US President George W.) Bush administration's intent to de-fang Iraq's leadership."
On Tuesday, the December contract for benchmark US light, sweet crudes declined by 4¢ to $25.90/bbl on the New York Mercantile Exchange, while the January contract also declined by 4¢ to $25.30/bbl.
Unleaded gasoline for December delivery dropped 0.12¢ to 69.84¢/gal. Heating oil for the same month climbed 0.16¢ to 69.01¢/gal.
The December natural gas contract rose 9.4¢ to $3.87/Mcf Tuesday on NYMEX.
In London, the December contract for North Sea Brent oil lost 7¢ to $23.72/bbl on the International Petroleum Exchange. The December natural gas contract remained unchanged at the equivalent of $3.77/Mcf on IPE after a day of little trading activity.
OPEC's basket of seven benchmark crudes gained 1¢ to $23.72/bbl Tuesday.
