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Mix-Ansicht- Crude Oil Has Biggest Drop Since 1991 - KEEP-COOL, 22.03.2003, 20:57
Crude Oil Has Biggest Drop Since 1991
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03/21 15:43
Crude Oil Has Biggest Drop Since 1991 as Iraqi Fields Seized
By Soozhana Choi
New York, March 21 (Bloomberg) -- Crude oil fell to its biggest weekly decline since the start of the Persian Gulf War in 1991, as U.S. and U.K. forces secured Iraqi oil fields in the second day of a campaign to topple Saddam Hussein.
Allied forces have control over ``a nontrivial fraction'' of oil fields in southern Iraq, Defense Secretary Donald Rumsfeld said. The region accounts for 68 percent of Iraqi oil output. The quick seizure of the fields may mean oil production will resume within weeks.
``This is exactly what traders were waiting to hear,'' said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. ``It's extremely important news that these major fields are safe and suffering minimal damage.''
Crude oil for May delivery fell $1.21, or 4.3 percent, to $26.91 a barrel on the New York Mercantile Exchange, the lowest closing price since Dec. 4. The 24 percent decline this week was the biggest since January 1991.
In London, the May Brent crude-oil futures contract fell $1.15, or 4.5 percent, to $24.35 a barrel on the International Petroleum Exchange.
Seven oil wells were on fire in the Rumaila fields near the southern city of Basra, said U.K. Admiral Michael Boyce, chief of U.K. defense forces.
The Rumaila fields in the south have 663 wells and Kirkuk in the north has 337 wells, according to Dan Butler, an oil-market analyst with the Energy Department's Energy Information Administration.
``If it's true that they've taken these fields and the damage to them is minimal, it could take a matter of days or a few weeks at the most to restart production,'' said Lowell Feld, an oil market analyst with the Information Administration.
Iraqi Production
Iraq last month pumped 2.48 million barrels a day, or about 3 percent of the world's oil, according to a Bloomberg survey.
For traders who use price charts and graphs to make their decisions, oil still has further to fall.
``At this rate, it's possible we're looking for support around $26'' a barrel in New York, matching the lows in December, said Tom Bentz, an oil broker at BNP Paribas Commodity Futures Inc. in New York. ``Once we get past that, we'll see next support at $25.''
As Iraqi forces fled Kuwait in Operation Desert Storm 12 years ago, they set fire to more than 500 oil wells, according to the U.S. State Department.
Iraqi Oil
Teams of British engineers given the task of securing the Rumaila oil field's facilities have joined the push into Iraq.
``My job is to preserve something for Iraq after the war,'' said Major Ian Hutchinson, part of the team of engineers. ``What we're doing also will bring stability to the international oil markets. The Rumaila field is a strategic objective.''
Iraq is pumping 573,600 barrels of oil a day to the Turkish port of Ceyhan on the Mediterranean, the lower end of what the pipeline normally carries, Turkey's pipeline monopoly Botas said.
Allied movements in the north and the south came amid conflicting intelligence reports on whether Hussein was killed in the opening assault on Baghdad.
In a news conference broadcast by the BBC, Iraqi Information Minister Mohammed Al-Sahaf said Hussein was safe. The Washington Post, citing unidentified U.S. intelligence officials, said Hussein and possibly one or both of his sons were inside the compound in southern Baghdad when it was struck by bombs and cruise missiles.
Senior Iraqi officials are engaging in surrender talks, Sky News reported, citing unidentified U.S. officials.
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