Oil Prices Now Highest Since Gulf War

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Well, I guess someone's making money......

-------------------------------------------------------------------- From: Yahoo Monday March 6, 6:43 pm Eastern Time NYMEX crude ends at highest since Gulf

NEW YORK, March 6 (Reuters) - Front month crude oil futures on the New York Mercantile Exchange settled Monday at their highest since the 1990/91 Gulf conflict as OPEC price hawks disputed the need to raise output in the second quarter and on concerns over U.S. gasoline prices shooting up in the summer, traders said.

NYMEX April crude settled at $32.18, up 67 cents, surpassing the $32.00 settlement on January 16, 1991 and the highest since November 29, 1990, when it settled at $32.91 after Iraq's invasion of Kuwait in August of that year. On that day, NYMEX crude peaked at $33.75. (correcting 1990 settlement from $33.75)

April crude posted an intraday high of $32.20, which it reached in the waning minutes of the session after struggling to break above last week's high of $32.15.

Crude's strong performance continued to be underpinned by a rift among OPEC members over what the cartel should do with output after supply curbs expire at the end of the month, they said.

Disruptions in Nigerian and North Sea production also stocked bullish sentiment, traders said.

A warning from the U.S. Energy Information Administration (EIA) that U.S. gasoline prices could soar to as much as $1.80 a gallon in the summer due to tight global oil supplies helped push the entire complex higher, they added.

The EIA also estimated that world oil prices could rise to $35a barrel by the spring if OPEC delayed increasing output until thefourth quarter, sending oil prices higher in late trade.

April gasoline firmed, last trading at 98.15 cents a gallon, up 0.54 cent on the day. It peaked at 98.60 cents and traded a slow as 78.15 cents.

But gasoline's spring and summer month contracts all posted gains of more than 1.00 cent, reflecting what traders said were concerns over a supply squeeze during the summer driving season.

For example, May gasoline last traded at 92.65, up 1.17 cents while June ended at 88.10 cents, up 1.27 cents.

April heating oil ended at 79.30 cents, up 0.41 cent, moving down from the day's high of 80.00 cents, up 1.11 cent. It dipped as low as 78.15 cents.

In London, April Brent crude on the International Petroleum Exchange (NYMEX) last traded at $29.65, up 66 cents, setting a fresh Gulf War high.

Price hawks Iran, Libya and Algeria issued a statement on Monday questioning the need for an output increase in the second quarter, saying they see world demand falling by over three million barrels per day (bpd) during the period.

Their position ran against the stand of OPEC's Saudi Arabia and Venezuela and non-OPEC Mexico, which said last week they see the need for an output increase, though they said they needed time to determine when and by how much.

Kuwait, which previously was against an output increase, sided with the three over the weekend, saying increasing output was ``a step in the right direction.''

Iran, Libya and Algeria said they expected to meet before the full ministerial conference of OPEC on March 27 in Vienna. The OPEC conference will formally establish OPEC's future production policy.

Nigerian oil workers struck on Monday, causing concern that the country's exports to the West would be damaged.

At the North Sea, Norway's Statoil reduced production to a ``very low rate'' at its Statfjord and Gulfaks fields due to bad weather. Citing the same reason, Norsk Hydro said it also slashed output at four of its fields in the North Sea.

In the U.S., the EIA, a unit of the U.S. Department of Energy, said wholesale and reatil gasoline prices are poised to surge to unprecedented levels before spring is out.

An ``extraordinary'' price runup is likely in this month and in April because of the average wholesale price of gasoline and the cost of feedstock crude oil, it said.

-- Jim Cooke (JJCooke@yahoo.com), March 06, 2000

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