Oil prices rally after Bush beats war drums
Oil prices rally after Bush beats war drums
Agence France-Presse
London
Oil prices held above US$30 a barrel here on Wednesday amid
mounting alarm at the prospect of a war in Iraq which markets
fear could severely disrupt vital supplies from the key Gulf
region.
The price of benchmark Brent North Sea crude oil for February
delivery stood at $31.02 per barrel in early trading against
$30.61 at the close of the previous session, when prices had
gained 41 cents per barrel.
In New York, reference light sweet crude February-dated
futures, which climbed 11 cents to $32.37 per barrel on Tuesday,
rose further in after-hours trade.
"The more hawkish remarks from George Bush about Iraq and time
running out for them to come clean on the armaments issue has
helped underpin the rally," said Commerzbank analyst Steve
Turner.
US President George W. Bush expressed mounting impatience with
Baghdad Tuesday, warning that "time is running out" for Iraqi
leader Saddam Hussein to avert war by heeding a UN disarmament
ultimatum.
GNI analyst Lawrence Eagles added that although Bush said
little that was new, his comments had nonetheless served to
"underscore the US message and the potential for unilateral
action despite European pressure for diplomacy."
Commerzbank's Turner said reports of supply disruptions from a
number of North Sea oil rigs was a further factor which was
helping to buoy Brent contracts.
Analysts said attention was switching towards the release of a
weekly US inventory report due later which was expected to reveal
a 1.6-million-barrel draw in crude stocks, partially offset by a
rise in gasoline inventories.
Supply disruptions, stemming from the ongoing general strike
in Venezuela, have hit US stock levels in recent weeks, although
not as badly as many had feared.
That has led some commentators to speculate that fellow
members of the Organization of Petroleum Exporting Countries have
been pumping more oil to compensate for reduced Venezuelan
shipments.
Eagles said although the market was expecting only a modest
fall in US stocks, there was a danger the figures could lead
traders to question whether the current high price was justified.
"Our feeling is that if the report were to come in around
these levels the market would sell off," Eagles said.