NOVEMBER 22, 17:39 EST

Crude Oil Futures Continue Rise

By HERBERT G. McCANN AP Business Writer

Crude oil futures prices continued their climb in trading Monday on the New York Mercantile Exchange, reaching a new 8-year high as the market reacted to a decision by Iraq to halt oil exports after rejecting a U.N. offer of a two-week extension of the oil-for-food program.

While crude oil futures surged, natural gas futures prices plunged as much of the country continues to bask in above-normal temperatures. Unleaded gasoline and heating oil futures prices increased.

Iraq's decision to halt exports came in the wake of its rejection of a United Nations Security's Council decision to extend the oil-for-food program for two weeks.

Diplomats say Iraq views the two-week extension of the oil-for-food program as a tactic by the United States and Britain to pressure Russia and China, its closest allies on the Security Council, to agree to a new Iraq policy.

Council members agree on the need to restart U.N. weapons inspections but remain divided on the conditions Iraq must fulfill before U.N. sanctions imposed after Baghdad's 1990 invasion of Kuwait can be suspended.

Russia and China favor the suspension of sanctions soon after Iraq allows U.N. inspectors to return while the United States and Britain are demanding a longer waiting period and Iraqi answers to outstanding questions about its disarmament.

A 3-year-old exemption to economic sanctions allows Iraq to sell $5.2 billion worth of oil every six months to buy food, medicine and other humanitarian supplies as well as to pay reparations stemming from the 1991 Gulf War.

According to U.N. officials, more than $2 billion worth of humanitarian supplies and equipment approved under the program has not yet reached Iraq. And $2 billion from Iraqi oil sales is in an escrow account waiting to be spent.

The market also was boosted by reports that HOVENSA, a joint venture of the state-owned Venezuelan firm of PDVSA and Amerada Hess, is having problems restarting its refinery, which was shut down last week with the approach of Hurricane Lenny.

Light sweet crude for January delivery settled 93 cents higher at $27.07 cents a barrel.

In London, North Sea Brent crude for January delivery rose 71 cents to $25.78 a barrel on the International Petroleum Exchange.

Natural gas futures fell to a contract low Monday, pressured by mild weather in areas of the country where November demand is usually high.

``A warm November doesn't necessarily translate into a warm December and January,'' said analyst Bill O'Grady of A.G. Edwards & Sons Inc. ``November is the (natural gas) storage liquidation season. If you don't get good demand in November, it (the market) is bearish.''

December natural gas was 23.7 cents lower at $2.197 per 1,000 cubic feet.

Unleaded gasoline surged on the New York Mercantile Exchange, receiving a boost from an expected increase in demand due to holiday driving. But also fueling buying were concerns by the public about potential computer problems associated with the arrival of year 2000.

O'Grady noted that traditionally, most people drive with gas tanks half-filled. Fears computer glitches may disrupt electricity distribution and shut down gasoline pumps may prompt consumers to fill their tanks.

Gasoline stocks usually increase by about 25 million barrels during the holiday season, O'Grady said, adding that because of the Y2K fears, that is not likely to happen this year.

December unleaded gasoline was 2.62 cents higher at 75.77 a gallon. December heating oil was 1.38 cents higher at 69.43 cents a gallon.

-- G Bailey (glbailey1@excite.com), November 22, 1999

Answers

Well,well...did you notice the part of having trouble restarting the refinery. I would hazard a speculation that come 01/01/00 it will not be any easier to restart any other refineries which might be taken down for certain precautionary reasons. Apparently, one doesn't just flip some switches here and there and fire these babies right up. It is going to be interesting.

Have begun a recent migration through this forum.

-- David F Mcanally (Davem8608@aol.com), November 22, 1999.