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Crudes resume rally in Asia

as UN-Iraq talks stall

TOKYO: Crude oil prices in Asia jumped on Wednesday as prospects faded of Iraqi oil returning to world markets in the immediate future, traders said.

Prices in Asia gained about 27 to 50 cents per barrel from Tuesday as news that talks between Iraq and the United Nations on partial oil sales had stalled led traders to doubt the possibility of an imminent agreement.

By late afternoon, benchmark Brent crude oil for June stood at $20.50 on the Singapore International Monetary Exchange, up from the London Tuesday settlement of $20.23.

The June U.S. West Texas Intermediate crude contract on the ACCESS after-hours trading system stood at $23.12, up 42 cents from the Tuesday close of $22.70.

Offers of Malaysia's key benchmark crude Tapis rose to about $20.50 from below $20.00 on Tuesday.

Oil prices tumbled last week, after hitting five-year highs during a 10-week rally.

Developments in Iraq-U.N. talks have kept the oil market in a nervous state as a go-ahead for partial oil sales, which could amount to 700,000 barrels per day, would seriously batter world prices.

At issue is a proposal which would allow Iraq to sell oil to raise $2 billion over six months for food and humanitarian supplies. At the end of six months, the arrangement could be renewed for a similar term.

Iraq's chief negotiator in the oil-for-food talks, Abdul Amir al-Anbari, said on Tuesday that U.N. Secretary-General Boutros Boutros-Ghali would consult with the country's deputy prime minister, Tareq Aziz, on the latest version of a limited oil sales offer.

But Anbari said he did not expect Baghdad to be happy with the latest U.N. draft and thought it would object to the plan.

Anbari earlier said he planned to leave New York on Wednesday as there appeared to be no sense in continuing talks while Boutros-Ghali was travelling to South Africa for 10 days.

"With Anbari planning to leave on Wednesday, it seems highly unlikely an agreement will be reached in this round of talks," a trader said. "What's more, there has been no decision yet on whether a fourth round of talks will be held."

The latest round of negotiations began on April 8. Two previous rounds took place from February 6 to 19 and from March 11 to 18.

Anbari said he did not know if talks would resume at a later date.

Iraq has been under stringent U.N. sanctions since it invaded Kuwait in 1990 and has been forbidden to export oil except for small quantities to Jordan.

Most traders expected prices to rise further, supported by a possible breakdown in Iraq-U.N. talks, but doubted whether hefty gains would be possible.

A trader said: "WTI (West Texas Intermediate) is seen targeting $23.50, but the market seems to lack the impetus to clearly break above that level after seeing five-year highs earlier this month."

Another trader said: "Bullish sentiment has returned to the market. However, it is doubtful if WTI still has power to surge above $24.00."-Reuter