Increasing Petroleum Prices Raise Concerns
LONDON (AP) -- Petroleum prices surged Wednesday to the highest levels seen since the Gulf War, raising concerns about worsening inflation and a possible threat to the economies of poor, oil- importing nations.
Prices turned lower later in the day for North Sea Brent oil but continued a rally for the U.S. benchmark West Texas Intermediate crude.
The rebound in oil reflects signs that OPEC is planning to extend production limits as well as a cold snap in the northeastern United States that stoked demand for heating oil and natural gas. Industry analysts said that even though crude oil prices have more than doubled in the past year, countries dependent on imported oil should be able to avoid severe economic pain, barring another big and sustained spike in prices.
Before the late retreat, crude contracts in London reached their highest price since Jan. 16, 1991, on the eve of the air and missile offensive launched against Iraq by U.S.-led forces in the Gulf.
Much of the speculative buying is a result of expectations that ministers of the Organization of the Petroleum Exporting Countries will agree in March to extend the production limits adopted last year.
Evidence of tight supplies came in an industry report Wednesday of the steepest annual decline in U.S. crude oil inventories in at least a half century.
The American Petroleum Institute said U.S. oil inventories declined by more than 136 million barrels in 1999, a 12.7 percent plunge from the previous year and the biggest drop for a full calendar year in API records going back to 1950.
Contracts for Brent oil for March delivery jumped 25 cents per barrel to peak at $26.30 in early trading on the London International Petroleum Exchange, before slipping to close down 21 cents from Tuesday at $25.84.
West Texas Intermediate crude for February delivery shot up to a new nine-year high, rising as high as $29. …