Oil prices rise

Filed on February 7, 2003

LONDON- Oil prices firmed in early trading here on Thursday as traders awaited clues on whether a case put by US Secretary of State Colin Powell for war in Iraq would tip the balance in favour of UN support for action.

The price of benchmark Brent North Sea crude oil for March delivery rose 23 cents a barrel to $31.59. In New York, the reference light sweet crude March contract rose 35 cents to 33.93 dollars a barrel on Wednesday.

Prudential Bache broker Tony Machacek said the market was still digesting figures from the US energy department that revealed a modest weekly rise in crude stocks but a massive drop in products, particularly in distillates. He said the "massive draw" of 10 million barrels in distillate fuel stocks in particular had been "very surprising for the market." Machacek added that the market was also finding a response to Powell's speech, which he said "confirms that the threat of war is very much with us and is really a crucial bullish element for the market at the moment." Powell's presentation to the UN Security Council apparently failed to budge world opinion on a possible Iraq war, with most countries standing by their earlier positions.

In testimony before the Security Council, Powell said Iraq had failed the disarmament tests laid down in Council resolutions and had failed to seize the one last chance it had been given to avoid war. The four other veto-bearing members of the Security Council stood by their earlier statements, with Britain supporting the US position, France opposing it, and Russia and China calling for UN inspectors to be given more time. Though Powell's indictment left world opinion largely unmoved, analysts said the US bid to make a compelling case for war against Iraq could begin to turn opinion on the UN Security Council in favour of military action.

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