Crude oil prices rose to fresh highs yesterday as war fears intensified after British prime minister Mr Tony Blair said Iraq had active plans to use chemical and biological weapons, but the rally faded after Iraq pledged to give UN weapons inspectors "unfettered" access to all Iraqi facilities.
The Brent crude contract hit a one-year high in London, and US futures jumped to a 19-month high as Mr Blair said the policy of containment was not working.
But after Iraqi officials told reporters that UN weapons inspectors would be allowed to go "wherever they want to go", Brent crude briefly slipped into negative territory and ended just 20 cents higher.
Figures released late yesterday were expected to show US crude stocks falling for the fourth week. Analysts were expecting a draw of 2.8 million barrels, leaving stocks 15 million barrels below the same point last year.
"If the draws are repeated, then traders will be concerned that current OPEC policy is too tight," said Mr Lawrence Eagles of futures broker GNI.
Brent crude for November delivery was up 19 US cents to $29.32 (€29.87) a barrel late in the session in London after hitting a fresh one-year high of $29.88 in early trading. On Nymex, US crude hit $31.39, a 19-month high, before easing back to $31.03, up 32 US cents early in the afternoon.
OPEC basket oil, an average of seven OPEC-produced crudes, rose above $28 a barrel on Monday, which could trigger the oil cartel to increase production if the price remains above $28 for 20 consecutive trading days.
But Mr Rilwanu Lukman, OPEC president, said last week that the group was not obliged to raise production if the price spike was caused by an attack on Iraq.
- (Financial Times Service)
