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Oil prices ease, above $125

Oil prices ease, above $125
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First Published: Mon, May 12 2008. 09 17 AM IST
Updated: Mon, May 12 2008. 09 17 AM IST
AFP
Singapore: World oil prices eased but remained above $125 on Monday after an inflow of investment funds and supply worries helped push costs to another record high, analysts said.
New York’s main oil futures contract, light sweet crude for June delivery, was 56 cents lower at $125.40 a barrel.
The benchmark contract closed on Friday at $125.96 after spiking to a record $126.25 in intraday trading at the New York Mercantile Exchange.
Brent North Sea crude for June was 61 cents lower at $124.79 a barrel after briefly hitting an all-time peak of $125.90 in London on Friday before settling at $125.40.
World oil prices crashed through records every day last week and have rocketed 25% since the start of the year, when they broke the $100 barrier.
Analysts cite a variety of factors for the price spikes, including rising energy demand from Asian powerhouse economies China and India, and a weak U.S. dollar. Unrest and militant attacks targeting oil company infrastructure in Nigeria, Africa’s largest crude producer, have also pushed prices higher, analysts say.
Oil major Royal Dutch Shell said it was losing the equivalent of 30,000 barrels of crude oil per day because of recent attacks against its installations in Nigeria. The Royal Dutch Shell loss translates to $3.47 million in lost revenue every day, said Chidi Izuwah, a spokesman for the Shell Petroleum Production Company.
Anglo-Dutch oil group Shell, Nigeria’s largest oil operator, accounts for around half the country’s 2.1 million barrels per day output. An upsurge in attacks by militant groups on its facilities has forced it to cut back on production.
Emori and other analysts say an inflow of investment funds has also been a key factor behind the surge in oil prices.
Lehman Brothers analyst Edward Morse said another factor is “stockpiling in China to prevent shortages ahead of the Olympics” in Beijing from August 8-24.
Industry experts say China, which enjoys record-breaking economic growth, will need even more crude oil to provide the facilities, transportation and energy supplies that are required to power a successful Olympic Games.
The Organization of the Petroleum Exporting Countries (OPEC) cartel last week insisted the oil market was well-supplied and driven by speculators rather than by underlying demand.
U.S. President George W. Bush is to visit OPEC’s largest producer, Saudi Arabia, on Friday, and is to express US concerns about the dramatic rise in oil prices.
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First Published: Mon, May 12 2008. 09 17 AM IST