Oil gains on renewed threat of war By Myra P. Saefong, CBS.MarketWatch.com Last Update: 11:43 AM ET Sept. 4, 2002
NEW YORK (CBS.MW) -- A rise in petroleum futures prices picked up speed Wednesday as comments from President Bush indicated the likelihood of a war with Iraq. Free! Sign up here to receive our After the Bell Report e-newsletter! INFORMATION FOR DJIA: Create an alert for DJIA Add DJIA to my portfolio Get more cool charts on DJIA Discuss DJIA NEWS FOR DJIA More news for DJIA Quote & News Charts Financials Analysts Options SEC Filings Again it sounds like V. is trying to give OPEC a backbone. Gotta wonder if the on again, off again war is part of this dialog on some level. Not to mention coups and up-stream energy market liberalization deals going to non-US co's. Multi-fronts. Like, $25/barrel in today USD isn't the same as it was when those guidelines were set. Unless you never buy anything in Yen or Euros I guess...?? Or have to pay back any debt in stronger currencies. The world must be getting very tired of USD as currency reserve. It's like, We're all Maylaysians now, sort of feeling I would guess. TRACK THESE TOPICS My Portfolio Alerts Column: Futures Movers Create Edit My Portfolio | Edit Alerts The oil market also looked forward to Wednesday afternoon's update on U.S. petroleum supplies from the American Petroleum Institute. "Doing nothing about that serious threat is not an option for the United States," Bush said after a meeting with congressional leaders, referring to Iraqi President Saddam Hussein. There are too many "potential land mines" in the oil markets right now, "especially with Iraq and Sept. 11 anniversary right around the corner," said Kevin Kerr, a financial analyst at Weiss Research in Palm Beach Gardens, Fla. Market analysts have been stating that a war premium as high as $8 has been built into crude-oil prices, he said, but "if cruise missiles start to fly in the Middle East, $8 will be only a drop in the barrel." On the New York Mercantile Exchange, October crude tacked on 51 cents to stand at $28.30 a barrel. Brent's October contract climbed 43 cents to $27 a barrel on the International Petroleum Exchange. Crude futures prices in New York on Tuesday fell to their lowest level in nearly three weeks after Iraqi Deputy Prime Minister Tariq Aziz said his country would consider the return of United Nations weapons inspections under a comprehensive settlement of differences between Baghdad and Washington, including the ending of sanctions. But shortly after the statement from Iraq, British Prime Minister Tony Blair voiced support for Washington to proceed with an attack on Iraq. While "recent tough talk from the U.S. has brought the Iraqis back to the bargaining table," said Altavest.com analyst Michael Armbruster, the problem for Iraq "is that there may not be anyone from the Bush administration on the other side." Armbruster remains convinced that the U.S. will go to war with Iraq "sooner or later" and until more is know about the situation, he looks for crude prices to be "driven by the daily headlines." In other news, a weekly report on oil supplies from the API, which was delayed by one day due to Monday's holiday, was due out Wednesday afternoon. Estimates for the report varied greatly among analysts. IFR Pegasus in New York predicted that crude-oil supplies as of the week ended Aug. 30 remained unchanged or fell by as much as 2 million barrels. Distillate inventories likely remained unchanged or rose by as much as 1 million barrels, while gasoline supplies fell between 500,000 barrels and 1.5 million barrels, the brokerage said. OPEC move in question Investors also digested mixed comments from OPEC members to predict whether the cartel would make a change to production quotas when it meets on Sept. 19 in Osaka, Japan. Currently, opinion is evenly divided within OPEC as to whether production quotas will remain unchanged at 21.7 million barrels a day or increase by as much as 1.5 million barrels a day, Banc of America Securities' Tyler Dann said in a note to clients Wednesday. Dann noted that the final decision would rest upon Saudi Arabia's ability to convince fellow OPEC members of their preferred course of action, which hasn't been decided yet. Venezuela has made it clear that it won't support an increase in output quotas, said Weiss Research's Kerr. He believes OPEC members will fall in line with Venezuela's decision. Also on Nymex Wednesday, October heating oil climbed by 1.99 cents to 74.8 cents a gallon and October unleaded gasoline rose 1.48 cents to 76 cents a gallon. October natural gas tacked on 5.3 cents to stand at $3.185 per million British thermal units. In other futures news, gold for December delivery traded at $314.60 an ounce, down 40 cents from the previous session's close. See Metals Stocks. The Reuters/CRB Index, a broad-based measure of the commodity futures market, rose to a reading of 219.81, up 0.9 percent. Myra
