Iraq begins pumping oil into Turkey; prices drop

PROFIT-TAKING: Crude prices dropped nearly 3 percent on news that the US' oil reserves had risen 3.8 million barrels on strong imports from Iraq and Venezuela


Sun, Oct 19, 2003 - Page 10

Rising US crude inventories pushed world oil prices down sharply on Friday as traders took profits from a blistering four-week rally.

US crude futures settled US$0.86, or nearly 3 percent, weaker at US$30.68 per barrel. North Sea benchmark Brent crude oil settled US$0.98 weaker at US$29.02, chipping away at a rally that began in late last month when OPEC announced a surprise output cut.

OPEC agreed to slash production 3 percent, or 900,000 barrels per day, starting Nov. 1.

This week's US government data showed crude stocks rose 3.8 million barrels, or 1.3 percent, on strong imports from Iraq and Venezuela.

"Fears of low inventories are misplaced," London's Man brokers said in a daily report.

The data left US crude stocks 5 percent higher than last year, but were not seen as a cure-all to strong oil prices because oil stocks last fall were low leading to a winter in which they hit an all-time low.

The supply cut by the Organization of the Petroleum Exporting Countries surprised traders because they were expecting demand to rise as winter closes in on the Northern Hemisphere.

The stock picture was not uniform, however, as US heating oil, watched closely as temperatures drop, fell to a deficit of 3.7 million barrels compared with the same time last year.

The rally was helped by the threat of further disruption in Nigeria, the world's seventh largest exporter. Nigerian unions are unhappy with government plans to raise petrol prices.

Meanwhile, Iraq resumed pumping oil through its northern pipeline to Turkey yesterday, but the flow stopped after two hours because of technical problems, a Turkish official said.

The official gave no details as to why the pumping, the first in two months, was halted.

In August, Iraq briefly pumped crude oil through the pipeline to Turkey's Mediterranean coast for the first time since the war, but the flow was halted because of sabotage and other problems.

Two Turkish officials, speaking on condition of anonymity, said yesterday that Iraq resumed pumping oil through the 950km pipeline from the northern Iraqi city of Kirkuk to Turkey's Ceyhan port at 11am.

But the flow later stopped because of unspecified technical problems, one of the officials later said. The official added the oil flow could resume as early as today.

Turkey's Anatolia news agency quoted Gurhan Gur, a top official at Ceyhan, as saying a leak in the pipeline was to blame. Gur added that the flow stopped before the oil reached Ceyhan.

The Turkish officials said between 400,000 and 600,000 barrels of oil would be pumped daily.

Reopening the pipeline would be an important step in rebuilding Iraq's oil industry, bringing oil from the vast northern fields to world markets.

Iraq resumed oil sales in June, when tankers began shipping crude that had been in storage at Ceyhan since the war halted exports.

Iraq has since only been pumping oil through its other pipeline in the south.