Crude oil jumped after a barge carrying 4 million gallons of gasoline exploded at an Exxon Mobil Corp terminal on New York's Staten Island, threatening to disrupt supplies in the Northeast.
The barge was being unloaded at Port Mobil facility at the time of the explosion, Exxon Mobil spokesman Tom Cirigliano said.
The blast shut down the Arthur Kill, a waterway serving refineries and wholesalers in the New York harbor region, the top entry point in the Northeast for crude oil and refined products. Gasoline and heating oil prices also surged.
"The big question now is how long the Arthur Kill will be closed and how long it will be before crude oil can be shipped to the string of refineries on the New Jersey side of the waterway," said Jim Steel, director of commodity research at Refco Inc in New York.
Crude oil for April delivery rose US$0.84, or 2.4 percent, to US$35.58 a barrel on the New York Mercantile Exchange. Prices were up 0.6 percent this week.
The March gasoline futures contract gained US$0.047, or 4.9 percent, to US$1.0128 a gallon on the New York exchange. It was the biggest one-day rise since Jan. 9. The March heating oil futures contract rose US$0.0498, or 4.7 percent, to US$1.1085 a gallon on the New York exchange, the highest closing price for a contract closest to expiration since December 1979.
"It doesn't look like operations in the area will be down long," said Kyle Cooper, an analyst with Salomon Smith Barney Inc in Houston. "The Exxon facility should be up pretty soon. I thing the effects will be short term."
Oil prices had already been rising, as Defense Secretary Donald Rumsfeld said US troops deployed in the Persian Gulf are ready to attack Iraq.
Iraqi President Saddam Hussein is not cooperating with UN arms inspectors, who are investigating Iraq's weapons program, Rumsfeld said late yesterday on PBS television. The US has said it's prepared to lead a coalition to disarm the Persian Gulf oil producer. The region pumps about a quarter of the world's oil.
"He made it clear that the US could invade at any time," said Aaron Kildow, an energy broker at Prudential Securities Inc.
in New York. "The US is capable of launching an attack as soon as this weekend, or at any other time it chooses."
The expiring March futures contract reached US$37.55 a barrel on Thursday, the highest price for a contract closest to expiration since Sept. 20, 2000.
The US and UK plan to introduce a resolution at the UN Security Council next week that may say Iraq hasn't met the demands of a November resolution. The council in November threatened "serious consequences" for Iraq if it failed to reveal its arms programs.
The Security Council is divided over Iraq. France, China and Russia, which have veto power, oppose authorizing military action and want UN inspections to continue.
The US and UK are deploying about 225,000 troops in the Persian Gulf region in preparation for military action. The Canadian government urged its citizens to leave Israel, Jordan, Syria, the West Bank and the Gaza Strip, while the UK said Britons should avoid Bahrain, Jordan, Qatar and Saudi Arabia.
In London, the April Brent crude-oil futures contract rose US$0.71 to US$32.27 a barrel on the International Petroleum Exchange.
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