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Crude oil falls as Blix says Iraq is disarming

Crude oil fell for a second day after Chief UN weapons inspector Hans Blix said Iraq's decision to destroy banned missiles was a "very significant" step that amounts to "real disarmament."

"The news that Iraq might destroy the missiles has taken the edge off" the rally, said Aaron Kildow, an energy broker at Prudential Securities Inc in New York.

Crude oil for April delivery fell US$0.60, or 1.6 percent, to US$36.60 a barrel on the New York Mercantile Exchange.

Oil yesterday reached US$39.99 a barrel, the highest price since October 1990, when Iraq's occupation of Kuwait led to the cutoff of exports from both nations. Oil gained up 2.9 percent this week.

In London, the April Brent crude-oil futures contract fell US$0.25, or 0.8 percent, to US$32.79 a barrel on the International Petroleum Exchange.

US oil inventories are close to a 28-year low.

Iraq said it may begin destroying missiles today, complicating US efforts to build an alliance within the UN for an attack against the oil producer.

Prices have soared 35 percent since Dec. 1 as the US and UK moved about 225,000 troops to the Persian Gulf, where a quarter of the world's oil is pumped.
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