UPDATE 3-U.S. oil races to $37 as fuel inventories fall
(Reuters 02/26 09:20:14)
(updates throughout)
By Richard Mably
LONDON, Feb 26 (Reuters) - Oil prices spiked on Wednesday
after the U.S. government reported a big dip in national winter
heating fuel stocks just as Washington presses its case for war
against Iraq.
The Department of Energy said stocks of heating oil at U.S.
refineries in the week to February 21 fell 3.9 million barrels
to 36.1 million.
U.S. light crude <CLc1> rose 99 cents to $37.05 a barrel,
just short of a two-year high. London Brent blend gained 63
cents to $32.95 a barrel.
"For short-term trading targets there's really not much
holding this market back from $40 a barrel," said Paul Horsnell,
oil analyst at JP Morgan.
The U.S. inventory slump has reinforced the impact on oil
prices of a bout of colder-than-normal winter weather in the
world's biggest energy consuming nation.
U.S. importers are missing large volumes of refined products
from Venezuela where a strike has kept big refineries idled
since early December.
U.S. heating oil stocks now are 17.4 million barrels, 33
percent, lower than a year ago.
"These latest inventory figures are scary," said Horsnell.
Oil is already priced at a premium for fear a U.S. attack on
Iraq, the world's eighth largest oil exporter, could slash oil
shipments from the Middle East, which supplies about 40 percent
of the global crude trade.
"The market expects a war sooner rather than later," said
John Hirjee, senior energy analyst at Deutsche Bank in
Melbourne.
Wednesday's data on commercial U.S. stockpiles countered
comments from Washington on Tuesday that it was ready to quickly
release government strategic oil reserves if it judges that a
war in Iraq is causing a severe supply disruption.
U.S. Secretary of Energy Spencer Abraham said he would
release crude from the 600-million-barrel national reserve if
supplies suffer a heavy cut from war.
But Washington has yet to make clear whether it thinks a
stoppage of Iraq's 1.7 million barrels a day of exports would be
sufficient to warrant a release.
OPEC has said it has enough spare capacity to cover any
Iraqi outage.
((richard.mably@reuters.com; reuters messaging:
richard.mably.reuters.com@reuters.net; +44 207 542 6280))
REUTERS
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