By OGJ Staff
HOUSTON, Feb. 11 -- US futures prices for crude oil, refined products, and natural gas all declined Monday on signs of no immediate war between the US and Iraq, although analysts said the near-term outlook remains bullish.
Iraq accepted the United Nations demand to allow surveillance flights in the search for weapons of mass destruction. Although the US already has created a massive military build-up, its allies France, Germany, Russia, and China are against going to war quickly.
Meanwhile, UN Chief Arms Inspector Hans Blix is slated to report to the UN Security Council Friday regarding progress on Baghdad's compliance with disarmament mandates.
"It's not clear that his updated appraisal will be any less negative regarding Iraq's intent to comply with inspection covenants�reliable indications suggest the UK has been drafting a second UN resolution regarding the 'serious consequence' aspect of non-compliance," sad Michael Rothman, senior energy market specialist with Merrill Lynch Global Securities Research & Economics Group.
Other analysts said energy futures traders Monday stepped back from last week's price surges to reconsider the timing of a potential war.
Oil traders, sensing a delay in any war, took the opportunity to sell. The March contract for benchmark US light, sweet crudes dropped 64¢ to $34.48/bbl Monday, with the April position down by 55¢ to $33.70/bbl.
Unleaded gasoline for March delivery lost 3.95¢ to $1.0275/gal. Heating oil for March delivery settled at $1.04/gal, down 5.1¢ for the day on the New York Mercantile Exchange.
The March natural gas contract declined 19¢ to $5.85/Mcf Monday on NYMEX. The futures market was pressured by profit taking on reports of milder weather next week.
"But despite the sell-off, the downside may be limited near term by concerns about dwindling storage and expectations for another supportive weekly inventory report on Thursday," said analysts Tuesday at Enerfax Daily.
In London, the March contract for North Sea Brent dropped 64¢ to $31.70/bbl on the International Petroleum Exchange. However, the March natural gas contract gained by 13¢ to the equivalent of $2.79/Mcf on IPE.
Tuesday was a holiday for the Organization of Petroleum Exporting Countries so its reporting of Monday's price for OPEC's basket of seven benchmark crudes will not be available until Wednesday.
