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March crude surges to contract high

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Equities have been rather quite in today's trade, but commodities continue to power higher as "war with Iraq" jitters keep traders in the commodity markets on edge.

March Light, Sweet Crude (cl03h) $31.00 +4.62% has taken out the $31/barrel level and traded a contract high of $31.10 within the past 25-minutes. Gains are not only attributed to "war jitters," but price gains are being exacerbated by a 22-day-old strike by Venezuelan oil workers.

"The combination of very thin trading, coupled with investors leaving for vacation is what is driving prices higher," said Kevin Kerr, a financial analyst at Weiss Research in Palm Beach Gardens, Fla., adding that investors don't want to be short ahead of the holiday.

The trading pits are about half full and Tuesday's trading will be even lighter, he said.

"Liquidity is drying up and sellers are scarce, all of this is helping to drive prices higher," Kerr said.

The New York Mercantile Exchange will hold a shortened trading session Tuesday, in preparation for the Christmas holiday Wednesday, with energy futures trading ending at 1 p.m. EST time and metals trading closing by 12:10 PM EST.

Sector action in the equity markets has the Gold/Silver Index (XAU.X) 77.49 +3.48% leading today's sector winner's list, while the CBOE Oil Index (OIX.X) 263.50 +0.54% is up fictionally.

Shares of Dow component Citigroup (NYSE:C) $37.49 -1.7% are back near their afternoon lows of $37.37 after the banking giant said it would take a $1.5 billion charge in its fourth quarter, or 29 cents a share, to settle issues regarding its research, initial public offering allocation and spinning-related activities.

The $1.5 billion charge also covers regulatory inquiries and private litigation related to Enron, which includes $200 million , or 4 cents a share, to increase its credit losses. Analysts expected the bank to earn 75 cents a share in the fourth quarter.

Merrill Lynch said that while the charge was a large amount, it was "relatively modest" given Citigroup's earnings capacity, equity base and loan loss reserves. Merrill thought there would be little chance of any negative credit rating changes to Citigroup's debt.

Jeff Bailey

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