Newspaper article THE JOURNAL RECORD

Oil Futures Prices Soar amid Threats on Product Supplies

Newspaper article THE JOURNAL RECORD

Oil Futures Prices Soar amid Threats on Product Supplies

Article excerpt

Oil futures prices soared to a seven-week high Monday as political disputes threatened supplies.

Light sweet crude oil for delivery in June settled at $21.38 per barrel, up 95 cents on the New York Mercantile Exchange -- the highest price for the contract closest to delivery since March 21 and the biggest one-day gain since March 18.

A U.S. military official over the weekend warned Iran against any action that would close the Strait of Hormuz in the Persian Gulf, through which a good portion of the world's oil travels. The Iraqi National Congress, an Iraqi opposition group, said several armored and mechanized battalions moved into northern Iraq in recent days, Platt's Global Alert reported. The INC couldn't be reached for comment, while a U.S. Pentagon spokesman said the report was inaccurate. Political and military tensions in the Middle East, which supplies more than a quarter of the world's oil, recently helped the market rebound from a 28 percent price slump since early January caused by disappointing demand for heating oil. "Concerns about the Middle East were the main thing (Monday)," said Hugo Zagaria, an international crude trader at Cargill Northeast Petroleum in Beverly, Massachusetts. "Any news coming from the Middle East is a real hype for the market at the moment. It was a big move up." That was followed by Britain's new Labor government saying it would take tougher action to force Nigeria's military government to call for free elections. Such action could include an oil embargo. Further boosting prices was a report that western Venezuela's 300,000 barrel-a-day Punta Cardon refinery had been shut down because of a power outage. Unleaded gasoline for delivery in June settled at 64.47 cents a gallon, up $1.58, on the New York Mercantile Exchange. Home heating oil for delivery in June settled at 56.65 cents a gallon, up 2.13 cents. Natural gas prices were lower, with contracts for delivery in June settling at $2.224 per 1,000 cubic feet, down 1.8 cents. In London, North Sea Brent Blend crude oil for delivery in June settled at $19.72 per barrel, up 79 cents, on the International Petroleum Exchange. Iraq, which was prohibited from exporting oil after invading Kuwait in 1990, resumed shipping limited quantities in December under a United Nations oil-for-aid accord. It currently produces about 1.31 million barrels of oil a day, about half of which is exported. "Iraq is what has got the market going with the story that they are massing troops on the northern border," said Warren Tashnek, an energy analyst at Fimat Futures USA in Houston. "There could be several implications from that: It could very possibly jeopardize the U.N. deal." Still, the Pentagon said reports of Iraqi troop movements in northern Iraq were inaccurate. …

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