NEW YORK – Oil prices fell 2 percent Wednesday as a top Pentagon official said Iraq's declaration of its arms programs, expected this weekend, will not trigger a U.S. decision on military action against Baghdad.
A surprise gain in U.S. crude oil stocks — narrowing a fuel supply deficit heading into winter — helped push prices lower, easing concerns over oil supply disruptions in the third day of Venezuela's general strike.
U.S. light crude lost 59 cents to $26.71 a barrel, while Brent crude in London was 67 cents lower at $25.22.
U.S. Deputy Defense Secretary Paul Wolfowitz eased fears of imminent military conflict in Iraq by saying that Baghdad's declaration of its arms capabilities — due by Dec. 8 — would not immediately trigger war.
The United States has repeatedly aired a warning for Iraq to disarm — required under a tough, new U.N. resolution — or face a possible U.S.-led military attack.
"We're not going to make it on one single piece of information, but on patterns of information and also close consultation with allies," Wolfowitz said in Brussels.
At the U.N. headquarters in New York, diplomats said they expected Iraq's declaration to arrive late on Sunday for at least 10 days of translation and analysis.
Iraq said on Wednesday the declaration it would hand to the United Nations would describe its biological, chemical, missile and nuclear technologies, but it would not admit to having weapons of mass destruction.
Oil prices are finding some support from a strike in Venezuela, as a nationwide strike by foes of President Hugo Chavez in the world's No. 5 oil exporter entered its third day.
Oil tanker loading delays at some Venezuelan ports increased, while concerns grew that oil production could soon suffer. Staffing problems were threatening key installations, including some refineries.
Venezuela, a member of the Organization of Petroleum Exporting Countries, produced 3.1 million bpd of crude oil in October, according to a Reuters survey, and supplies about 13 percent of imports into the United States.
Concern over the effect of Venezuela's disruptions was eased by a build in crude stocks in the United States, narrowing a sharp supply deficit against last year.
The American Petroleum Institute, an industry group, reported late on Tuesday that U.S. crude oil stocks jumped 3.7 million barrels in the week to last Friday.
Oil traders have been expecting higher foreign crude supplies to hit U.S. shores after producers in the OPEC cartel raised supplies far above prescribed limits during September and October.
A government report Wednesday said U.S. heating oil supplies fell more than 3 percent last week as a cold snap in the eastern part of the country boosted demand.
Heating oil stocks fell 1.8 million barrels to 52.3 million barrels, according to the Energy Information Administration, the statistics branch of the Energy Department. Stocks were more than 17 percent below levels last year at this time.
"Heating demand was the primary driver as colder-than-normal temperatures continue in the Northeast," Washington D.C.-based Petroleum Finance Co. said in a report.