Oil trades higher after Bali bomb blasts
Oil trades higher after Bali bomb blasts
Reuters, London
World crude prices traded higher on Monday after a devastating bomb attack in the Indonesian resort of Bali added to underlying nervousness, although traders said it had no immediate consequences for oil trade.
Gains were bolstered by fears that a tropical depression forming in the Caribbean Sea could move into the Gulf of Mexico and hit the region's oil supplies as Hurricane Lili did earlier this month.
New York crude futures for November delivery settled 66 cents higher at US$30.03, while in London Brent crude closed 50 cents stronger at $28.49 a barrel. Volumes were low because of the Columbus Day holiday in the United States.
Dealers said the attack had increased concerns that more terrorist attacks would take place and potentially it could be seen as bolstering U.S. President George W. Bush's case for military action against Iraq as the next stage of his war on terrorism.
"It (Bali) does not look like a factor, but instability is an ongoing problem," said Mark Head of Fimat International Banque.
The killing of more than 180 people on the Indonesian resort island of Bali on Saturday came a day after the U.S. Congress gave Bush authority for the possible use of force to disarm Iraq of suspected biological and chemical weapons and topple Iraqi leader Saddam Hussein.
The weekend blast also coincided with news that last week's explosion on a French supertanker in the Gulf of Aden was almost certainly a deliberate attack.
Yemen, trying to shed an image as a haven for Islamic militants, initially said a fire caused the explosion, which killed one crewman, but sources close to the government-led probe said the Arab state was now sure it was deliberate.
The blasts have heightened concern that the Islamic militant network al Qaeda, blamed for the Sept. 11 attacks last year on the United States, has regrouped after it was routed from Afghanistan by U.S.-led forces.
In a statement released by the White House after the bombings in Bali, Bush said: "The world must confront this global menace, terrorism."
Bush has been pressing for the removal of Iraq's Saddam, who he claims has amassed an arsenal of biological and chemical weapons and may even be close to nuclear capability.
Although Bush's stance on Saddam is supported by Britain, Washington has yet to convince other permanent members of the U.N. Security Council -- France, China and Russia -- to agree to a tough new U.N. resolution leaving room for military action if Baghdad fails to meet terms for the return of weapons inspectors.
Although prices have retreated slightly, fears of a U.S.-led attack on Iraq had driven oil prices to 12-months highs of over $30 a barrel in the past few weeks, as traders feared any strike might lead to a spread of violence in the oil-rich Middle East and disrupt essential flows of crude oil.
Despite high oil prices, which some economists say could halt the fragile economic recovery, OPEC officials said at the weekend they saw no need to inject more crude oil into the market.
They implied current price levels were the result of speculation of a possible war rather than a shortage.