rude Oil Has Biggest Drop Since 1991 as Iraqi Fields Seized
2003-03-21 15:43 (New York)
Crude Oil Has Biggest Drop Since 1991 as Iraqi Fields Seized
New York, March 21 (Bloomberg) -- Crude oil fell to its
biggest weekly decline since the start of the Persian Gulf War in
1991, as U.S. and U.K. forces secured Iraqi oil fields in the
second day of a campaign to topple Saddam Hussein.
Allied forces have control over ``a nontrivial fraction'' of
oil fields in southern Iraq, Defense Secretary Donald Rumsfeld
said. The region accounts for 68 percent of Iraqi oil output.
The quick seizure of the fields may mean oil production will
resume within weeks.
``This is exactly what traders were waiting to hear,'' said
Ed Silliere, vice president of risk management at Energy Merchant
LLC in New York. ``It's extremely important news that these major
fields are safe and suffering minimal damage.''
Crude oil for May delivery fell $1.21, or 4.3 percent, to
$26.91 a barrel on the New York Mercantile Exchange, the lowest
closing price since Dec. 4. The 24 percent decline this week was
the biggest since January 1991.
In London, the May Brent crude-oil futures contract fell
$1.15, or 4.5 percent, to $24.35 a barrel on the International
Petroleum Exchange.
Seven oil wells were on fire in the Rumaila fields near the
southern city of Basra, said U.K. Admiral Michael Boyce, chief of
U.K. defense forces.
The Rumaila fields in the south have 663 wells and Kirkuk in
the north has 337 wells, according to Dan Butler, an oil-market
analyst with the Energy Department's Energy Information
Administration.
``If it's true that they've taken these fields and the damage
to them is minimal, it could take a matter of days or a few weeks
at the most to restart production,'' said Lowell Feld, an oil
market analyst with the Information Administration.
Iraqi Production
Iraq last month pumped 2.48 million barrels a day, or about 3
percent of the world's oil, according to a Bloomberg survey.
For traders who use price charts and graphs to make their
decisions, oil still has further to fall.
``At this rate, it's possible we're looking for support
around $26'' a barrel in New York, matching the lows in December,
said Tom Bentz, an oil broker at BNP Paribas Commodity Futures
Inc. in New York. ``Once we get past that, we'll see next support
at $25.''
As Iraqi forces fled Kuwait in Operation Desert Storm 12
years ago, they set fire to more than 500 oil wells, according to
the U.S. State Department.
Iraqi Oil
Teams of British engineers given the task of securing the
Rumaila oil field's facilities have joined the push into Iraq.
``My job is to preserve something for Iraq after the war,''
said Major Ian Hutchinson, part of the team of engineers. ``What
we're doing also will bring stability to the international oil
markets. The Rumaila field is a strategic objective.''
Iraq is pumping 573,600 barrels of oil a day to the Turkish
port of Ceyhan on the Mediterranean, the lower end of what the
pipeline normally carries, Turkey's pipeline monopoly Botas said.
Allied movements in the north and the south came amid
conflicting intelligence reports on whether Hussein was killed in
the opening assault on Baghdad.
In a news conference broadcast by the BBC, Iraqi Information
Minister Mohammed Al-Sahaf said Hussein was safe. The Washington
Post, citing unidentified U.S. intelligence officials, said
Hussein and possibly one or both of his sons were inside the
compound in southern Baghdad when it was struck by bombs and
cruise missiles.
Senior Iraqi officials are engaging in surrender talks, Sky
News reported, citing unidentified U.S. officials.
--Soozhana Choi in New York (212) 940-1151 or
schoi11@bloomberg.net, with reporting by William Roberts in
Washington, Ben Holland in the Istanbul and Steve Voss in London.
Editor: Banker.
Story illustration: To graph crude oil futures over the past year,
see {CL1 <Cmdty> GPO D <GO>}. For a tour of Bloomberg functions
related to Iraq and oil prices, see {CNP 00374240104 <GO>}. Click
lib.utexas.edu a map of Iraq's oil fields,
pipelines and refineries. |
