Oil Surges Again Amid Fresh Iraq-Kuwait Tension

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Monday October 2 11:40 AM ET

Oil Surges Again Amid Fresh Iraq-Kuwait Tension

By Michael Georgy

LONDON (Reuters) - Oil prices moved higher on Monday, boosted by renewed tensions between Iraq and Kuwait and signs that the European Union will not follow the U.S. lead in releasing emergency oil reserves to cool off the market.

Traders were also watching a storm in the Gulf of Mexico which was adding another element of uncertainty to the market.

International benchmark Brent crude for November delivery moved up a dollar higher to $30.84. U.S. light crude futures were up 96 cents at $31.71.

The rise came amid fresh tensions between Iraq and Kuwait which were helping push prices up again after a two-week pullback from 10-year highs at $34.98 for Brent.

Kuwait accused Baghdad of stealing large quantities of Kuwaiti oil through a pipeline laid during Baghdad's 1990-91 occupation of the Gulf Arab state.

The allegation came one day after Kuwait made a request to the United Nations (news - web sites) to take urgent steps to stop what it sees as the threatening behavior of Iraq.

Deputy Prime Minister and Minister of State for Cabinet and Parliament Affairs Mohammed Sharar said on Monday Kuwait had satellite pictures and field evidence to back up its claims.

``A recent scientific study...proves the falseness of Iraq's claims that Kuwait was stealing Iraq's oil and pictures show exactly the opposite of that. They prove that the Iraqi regime is the one that planned and carried out the theft of Kuwait's oil and the evidence is in the Kuwaiti desert,'' he said.

He was speaking after the government's weekly cabinet meeting on Sunday.

-- Carl Jenkins (Somewherepress@aol.com), October 02, 2000

Answers

Here's the rest of the story and a link (GHICC is still having tech problems)

Oil Market Wildcard Iraq

Last month, Iraq accused Kuwait of stealing its oil from a border field and vowed to take unspecific measures in response. Kuwait has strongly denied the charge.

Kuwait's main military and political ally the United States responded to the Iraqi claim with a warning that it would use force if Baghdad threatened its Gulf Arab neighbors.

Iraq, which has been cranking up production despite stringent United Nations Sanctions, is seen as an oil market wildcard because a politically calculated halt to Baghdad's exports would rattle the volatile market.

But Iraq told the market last week that it would not disrupt oil exports under the U.N.'s oil-for-food deal.

While Middle East developments were helping keep a bullish tone to the market, dealers also said the European Union governments' failure to agree on Friday to follow the lead set by the United States and sell strategic petroleum reserves was also strengthening prices.

Spain and France had backed a controlled release of contingency reserves to tame runaway prices near 10-year highs but toned down their arguments after Germany expressed doubts.

A final decision is not expected until a summit of EU leaders in Biarritz in the middle of October.

``Tensions between Iraq and Kuwait and the decision of the EU not to release reserves are strengthening prices,'' said Christopher Bellew, an oil dealer at Prudential-Bache.

Hurricane Keith (news - web sites) weakened on Monday but still pounded the coast of Belize with fierce winds and traders were watching whether it would go to the U.S. Gulf and threaten production of oil and natural gas there.

Saudi Arabia Moves To Ease Price Fears

Leading OPEC (news - web sites) producer Saudi Arabia moved to alleviate fears about the stubborn price rally last week, saying it would pump enough oil to stabilize the market.

OPEC's output hike of 800,000 barrels per day (bpd) has now kicked in and the market is also bracing for the extra 30 million barrels of oil that the United States said it would release from its Strategic Petroleum Reserves.

The United States is scrambling to try and build heating oil supplies for the peak demand winter season, an explosive issue at the top of the agenda during an election year. On Monday, U.S. Energy Secretary Bill Richardson will meet U.S. East Coast refiners and heating oil distributors to discuss heating fuel supplies. He is expected to ask refiners to delay routine maintenance to produce more heating oil.

http://dailynews.yahoo.com/h/nm/20001002/bs/market_oil_dc_2.html

-- Carl Jenkins (Somewherepress@aol.com), October 02, 2000.


http://www.canoe.ca/MoneyOilTemp/nymexoilfutures.html

-- Carl Jenkins (Somewherepress@aol.com), October 02, 2000.

NYMEX oil climbs above US$32 on Mideast tensions, supply woes  SPR questions seen holding U.S. crude markets weaker NEW YORK, Oct 2 (Reuters) - NYMEX crude oil futures climbed above US$32 a barrel Monday afternoon, stoked by renewed Mideast tensions amid continuing concerns over thin heating oil stocks. At 2:24 p.m. (1824 GMT), NYMEX crude for November delivery hit a new intraday high of US$31.18 a barrel, up US$1.34. "It's really back to fundamentals here, there is no decent (heating oil) product to speak off...their inventories are in multiyear lows," said an analyst at FIMAT USA Futures in New York. October heating oil futures struck a fresh intraday high of 96.75 cents a gallon and was trading just underneath that level, at 96.60 cents, up 4.04 cents. October gasoline was bullish at 88.30 cents, up 3.65 cents, after posting an intraday high of 88.40 cents. Across the Atlantic, November Brent crude continued to march higher and was trading at US$31.15 a barrel, up US$1.31. Snip

http://www.canoe.ca/MoneyOilTemp/nymexoilfutures.html

-- Carl Jenkins (Somewherepress@aol.com), October 02, 2000.


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