A SHARP fall in America's crude oil stockpile to its lowest level since October 1975 sent the price of US light crude to a 28-month high of US$36.20 a barrel yesterday.
Crude oil prices also remain supported by fears the US will lead a war on Iraq, which could disrupt that country's exports of two million barrels per day (bpd), as well as potentially affect its Gulf neighbours.
In early London trade, Brent crude was quoted at US$33.17 a barrel, compared with US$32.71 on Wednesday, and Malaysia's benchmark Tapis at US$34.65 a barrel, against US$33.45 previously.
Gold, however, slid to as low as US$348.75/349.75 an ounce in Asian trading as Americas European allies Russia, Germany and France reiterated their opposition to any military action for now. Profit-taking after the recent sharp gains also pulled down the gold price.
Dealers were quoted by Reuters as saying trading in spot gold was heavy across Asia but did not reach panic proportions.
Nevertheless, the precious metal regained some lost ground in early London trade to US$354.50/355.50 an ounce, compared with a six-week low of US$351.75/352.50 an ounce in New York trading due to the lingering fears of war.
All eyes are on chief United Nations arms inspector Hans Blix's report to the Security Council in New York later today. The report is considered a crucial factor for determining the direction of crude oil prices as well as that of safe-haven commodities gold and platinum.
The US Energy Information Administration (EIA) announced on Wednesday that the country's spare crude oil supplies dropped by 4.5 million barrels to 269.8 million as of Feb 7. The recommended minimum level is 270 million barrels.
The EIA said inventories of heating oil, petrol and jet fuel were also running at a deficit to year-ago levels.
The dwindling inventories in the US was due mainly to the disruption of crude oil supply from Venezuela, which accounted for about 13% of US oil imports, coupled with strong demand for heating oil this current winter season.
The low inventories has raised the urge to tap the nation's Strategic Petroleum Reserve. The last time Americans used their reserve oil stock was in September 2000, under the Clinton Administration, when crude prices hit a high of US$37.80 a barrel.