Oil extends rally on Iraq threats, Mideast strife
Oil extends rally on Iraq threats, Mideast strife
Reuters, London
Oil prices extended a week-long rally on Thursday as Britain
and the United States reiterated threats to use force on Middle
Eastern exporter Iraq, and violence flared in Israel.
Dealers said the bullish impact of escalating conflict in the
Middle East, which pumps a third of world oil, was dampened by
rampant quota busting by the OPEC cartel, which has lifted
exports recently.
International benchmark Brent crude oil rose 31 U.S. cents to
US$24.84 per barrel, bringing this week's gain to $1.49 so far.
U.S. crude futures climbed 23 cents to $26.32.
"It's a combination of factors pushing it up, but Iraq is
certainly on the front burner," said Nauman Barakat, a trader at
FIMAT International Banque.
Blair said if Iraqi President Saddam Hussein failed to
cooperate with a tough new United Nations resolution, he would be
disarmed by force.
His comments to a NATO summit in Prague followed a tough
warning by Bush that Saddam will have entered his "final stage"
as Iraq's leader if he denies stocking weapons of mass
destruction.
Saddam has already said Iraq is devoid of such arms, and plans
to provide a list detailing its weapons programs by Dec. 8.
"The war premium is certainly coming back into the market,"
said Barakat.
Before this week's recovery, oil prices slumped by 20 percent
in October and early November when Iraq accepted the return of
weapons inspectors and OPEC supplies swelled.
"Oversupply by OPEC and unexpectedly large Iraqi exports have
been pressing down on prices, but there is still the potential
for a risk premium to return," said Tor Kartevold, oil trading
adviser to Norwegian oil company Statoil.
"There is also the potential for an OPEC response if prices
fall," he added, in reference to OPEC's forthcoming policy
meeting on Dec. 12.
The Organization of the Petroleum Exporting Countries said
earlier this week that its members pumped 2.8 million barrels per
day or 13 percent above their official quotas last month.
If OPEC continues to pump at current rates, it would lead to a
global rise in inventories over the winter, when stocks normally
fall, the OPEC data showed.
Ali Rodriguez, oil company boss in OPEC member Venezuela, said
the cartel would tackle the issue of overproduction at the Dec.
12 meeting, to be held in Vienna.