The WALL STREET JOURNAL: Oil News Roundup: Friday June 9, 2006: ZARQAWI’S EFFECT ON OIL:

Oil prices tumbled in early trading after the death of Iraqi insurgent leader Abu Musab Zarqawi. But crude recovered most of its losses and ended trading on the New York Mercantile Exchange at more than $70 a barrel. Here is Thursday’s roundup of oil and energy news.

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ZARQAWI’S EFFECT ON OIL: One reason oil prices eventually stabilized: Many traders realized soon enough that the welcome end of one menace in Iraq didn’t mean crude oil was suddenly free to gush from Iraq’s pipes. Sectarian and insurgent violence won’t end tomorrow. Iraq’s oil infrastructure, meanwhile, was in awful shape after decades of neglect even before Saddam fell in 2003, and there hasn’t been time or security enough to rebuild it yet. “The end of Zarqawi will not be the end of threats to oil exports in Iraq,” said Mustafa Alani, an Iraq expert at the Gulf Research Council in Dubai. Meanwhile, oil’s early declines might have had at least as much to do with global economic jitters and stock selloffs as with the death of Mr. Zarqawi.

RESERVES, IMBALANCES GROW: Italian oil behemoth Eni released its World Oil and Gas Review for 2006, produced in conjunction with Cambridge Energy Research Associates. Global oil and gas inventories rose 1.2% and 2.1% last year, respectively, according to the report. But “significant strains on international oil markets” remain, the report said, thanks partly to demand in the fast-growing economies of China and India and a burgeoning supply of low-grade crude at a time of growing thirst for distillates made from lighter, sweeter stuff.

•No Threat From Asia: Another report, by consultancy Wood Mackenzie, says Asian oil companies aren’t buying overseas oil assets as quickly as people think and aren’t a major threat to the stability of the world’s oil supply.

•Browning Out Blackouts: China will likely have fewer rolling blackouts this summer than two years ago, an official with China’s top economic policy making body said.

•Slow Start for New Futures: Russia hopes Urals crude futures will some day be as globally significant as Brent and Nymex futures. That day is not here yet; Urals futures, which are settled in rubles, began trading in Russia, the Moscow Times reports. But volume was thin, Reuters reported.

•Hostage Release Promised: Nigerian militants promised to release five South Korean oil workers taken hostage Wednesday.

•Cool Biz in Japan: Japan’s office workers are gearing up for Cool Biz, a fashion season dedicated to cool (as in not hot) work clothes, which allow offices to set their thermostats a little higher, saving energy. One fashion tip: Short-sleeved suits are still not cool (as in don’t be caught dead in one).

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