By OGJ editors
HOUSTON, Jan. 17—Oil futures prices briefly reached a 2-year high of $33.98 on the New York Mercantile Exchange Thursday upon growing concerns about possible war in Iraq after United Nations arms inspectors found illegally imported arms material in Iraq.
But prices eased somewhat by the end of trading Thursday. Traders said speculators were squaring their positions before the February crude oil contract expires on Feb. 21. US markets will be closed Monday for Martin Luther King Day.
The February contract for benchmark US light, sweet crudes gained 45¢ to $33.66/bbl Wednesday on the NYMEX. The March position increased by 36¢ to $32.81/bbl. Heating oil for February delivery decreased by 1.2¢ to 89.67¢/gal. Unleaded gasoline for the same month was up 3.3¢ to 93.40¢/gal.
The February natural gas contract jumped by 21.5¢ to $5.645/Mcf on NYMEX. Traders said it was a 22-month high based on supportive gas-storage inventory numbers and cold weather forecasts for the US.
Regarding Iraq, Hans Blix, UN chief arms inspector, said he had yet to determine whether the discovered material was related to weapons of mass destruction. Blix said he plans to tell Iraq that the situation is growing "very tense and very dangerous."
US President George W. Bush on Thursday said time is growing shorter for Baghdad to comply with UN demands to disarm. US patience will run out "at some point," Bush said. Meanwhile, the Bush administration said it also was working to determine the significance of the materials found in Iraq.
Traders noted that the market effect of possible war in Iraq was eased somewhat after Venezuela President Hugo Chávez met with US Secretary General Kofi Annan in New York Thursday, seeking help in resolving Venezuela's political and economic problems.
Venezuela's economy and oil exports have been hindered by a general strike that started Dec. 2.
In London, the February contract for North Sea Brent oil increased by 44¢ to $31.66/bbl on the International Petroleum Exchange.
Meanwhile, the February natural gas contract held fairly steady, gaining 0.5¢ to the equivalent of $3.52/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes advanced to $30.87/bbl Thursday, up by 21¢.
