Oil at highest since March
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LONDON (Reuters) -- U.S. oil prices have jumped to their highest level since the Iraq war as government fuel data shows that cold weather is drawing down inventories.
In Wednesday trade, U.S. light crude for February delivery jumped 86 cents to $33.75 a barrel, the highest level since just before the U.S.-led invasion of Iraq in March.
London's Brent crude futures for February delivery rose 61 cents to $30.58 a barrel.
Prices jumped after the U.S. Energy Information Administration said that crude stocks fell 5.1 million barrels to 272.8 million barrels, the fourth straight weekly decline in a run that has pushed stocks nearly 29 million barrels below the five-year average.
Distillate stocks, including heating oil, dropped 1.4 million barrels to 130.7 million barrels after two big storms that swept through the U.S. Northeast in the first half of December.
"The big item was the crude stock draw," said Jim Ritterbusch, president at Ritterbusch and Associates.
Falling stocks of crude and natural gas ahead of winter have pushed OPEC's reference crude price to $30.34 Tuesday, well above the top end of the cartel's $22-28 target price range.
OPEC President Abdullah al-Attiyah of Qatar said Tuesday he was concerned that current oil prices are too high but said it was not because supplies were too low.
Prices have risen more than $5 a barrel, or 20 percent, since OPEC's September decision to cut supply by 3.5 percent. The cartel earlier this month decided to keep output limits unchanged and to meet again on February 10.
"I am concerned that the price is too high, but it is not related to supply," Attiyah said.
OPEC's biggest producer, Saudi Arabia, expressed less concern about prices. Oil Minister Ali al-Naimi has said current prices were justified by the weakness of the dollar against major currencies, which reduced oil producers' purchasing power.
"There is a difference between price and value. Focus on value," Naimi said when asked if he thought the current price was too high.
A further boost to prices came as a senior Iraqi oil official said Iraq's northern export pipeline, closed since March's U.S.-led invasion, had come under fresh attacks at the time of the weekend capture of former Iraqi leader Saddam Hussein.
Adel Kazzaz, head of the North Oil Company told Reuters the latest attack showed the line, which runs from Iraq's Kirkuk oil fields to Turkey's Mediterranean coast, was still too vulnerable to restart.
"It was subject to an attack only three days ago. Security measures remain insufficient to start the pipeline," Kazzaz said by telephone from Kirkuk. Separately, a fuel truck bomb in Baghdad Wednesday killed 17 people.
Iraq's sole oil export option is the southern Basra oil terminal in the Gulf, which has been shipping just under 1.5 million barrels per day (bpd) of Basra crude so far this month. Iraq had pre-war export capacity of 2.2 million bpd.
Copyright 2003
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
