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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (9645)	2/27/2003 7:45:02 AM
From: Kerm Yerman	Read Replies (2) \| Respond to of 24925

In The News / Crude oil Crude hits highest level since gulf war buildup By PATRICK BRETHOUR Globe & Mail Thursday, February 27, 2003 CALGARY -- Skittish traders drove crude prices yesterday to their highest level since the prelude to the Persian Gulf war in October, 1990, driven by fresh worries about declining oil inventories and the rising prospect of another U.S.-led assault on Iraq. The benchmark contract for light sweet crude on the New York Mercantile Exchange rose as high as $37.93 (U.S.) a barrel, and settled at $37.70, a gain of $1.64. Crude has not been so expensive since Oct. 16, 1990, when the United States and its allies were gearing up to expel Iraqi forces from Kuwait. A surprise decline in U.S. inventories of gasoline and oil was the main culprit behind the latest price spike in crude. Traders had been expecting increases in both, but the U.S. Department of Energy said yesterday in its weekly report that inventories fell sharply. Crude stores dropped one million barrels to 271.9 million in the week ended Feb. 21, close to the record low of 269.8 million set earlier this month. Gasoline inventories plummeted 3.1 million barrels to 208.1 million. Supplies of distillate fuels -- including heating oil and diesel -- fell below 100 million barrels for the first time in nearly three years, the Energy Department said. "The supply situation is dire," said Phil Flynn, a senior energy trader at Alaron Trading Corp. in Chicago, saying crude oil inventories are at "dangerously low" levels. The unseasonably frigid weather in the northeastern United States is boosting demand for heating oil, and the cold snap is likely indirectly cutting into supplies of gasoline, some observers said. "It looks like the incentives to make heating oil is so strong that refiners aren't making gasoline," said Michael Busby, manager of crude oil and refined products trading at Northville Industries Corp. in Melville, N.Y. A separate report from the American Petroleum Institute painted a less bleak picture. The API said oil inventories rose 3.02 million barrels to 271.31 million, also in the week ended Feb. 21. A statement from the United Nations' chief weapons inspector that Iraq may not want to co-operate on disarmament added momentum to the surge in oil prices, which were further propelled by British Prime Minister Tony Blair stating he expects support at the UN Security Council for a new resolution that could lead to war. One analyst said neither the changes in inventory nor the developments in the U.S.-Iraq confrontation were earth-shattering, but they were sufficient to rattle an already nervous market. "It's an elephant being frightened by a mouse," said Tim Evans, a senior energy analyst with IFR Pegasus in New York. Mr. Evans, like other analysts, said some of the upward momentum is coming from "short squeezes" -- short sellers who gamble, wrongly, that the price of oil is headed downward and then have to scramble to buy contracts when oil rises. That situation leads to a self-reinforcing push to oil prices, he noted.