Crude oil rose to a 29-month high after Hans Blix, the chief UN arms inspector, told the UN Security Council that Iraq has failed to disclose all its illegal weapons.
Mohamed ElBaradei, head of the International Atomic Energy Agency, said arms inspectors still have not uncovered weapons of mass destruction and that he wants to put more inspectors into Iraq. France, Russia and China want inspections to continue, while the US. and UK pursue a military buildup in the Persian Gulf.
"Nothing in the presentation will change the outlook for war," said Phil Flynn, a senior energy trader at Alaron Trading Corp in Chicago. "The US is going to do what it wants to do."
Crude oil for March delivery rose US$0.44, or 1.2 percent, to US$36.80 a barrel on the New York Mercantile Exchange. It was the second straight session that prices closed at their highest since Sept. 20, 2000. Oil rallied 4.8 percent this week. Expectations of an attack sent oil up 46 percent over the past three months.
"Oil's upside resistance is at US$37.05, then we'll see a big push to US$40," said Fred Schuster, at DRW Investments LLC in Chicago.
In London, the April Brent crude-oil futures contract rose US$0.04 to US$32.50 a barrel.
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