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Barrel vs barrel: Violence hit oil price, trades over $133

Barrel vs barrel: Violence hit oil price, trades over $133
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First Published: Tue, May 27 2008. 08 50 AM IST
Updated: Tue, May 27 2008. 08 50 AM IST
Singapore: Oil was trading around $133 in early Asian trade Tuesday after news of more violence in key African exporter Nigeria, dealers said.
New York’s main oil futures contract, light sweet crude for July delivery, climbed 81 cents to $133.00 per barrel after the US Memorial Day holiday on Monday.
The benchmark contract had settled at $132.19 a barrel on Friday.
London’s Brent North Sea crude for July delivery was trading 49 cents higher at $132.86 a barrel.
On Thursday, Brent struck an all-time high of $135.14 and New York crude reached a record $135.09, before both contracts plunged as investors banked profits.
A Nigerian militant group on Monday said it had attacked an oil pipeline run by Royal Dutch Shell in its main producing region, forcing it to shut some production.
The raid by the Movement for the Emancipation of Niger Delta, one of the main separatist groups in the region, came four days after the army said it had thwarted an attack on another Shell facility in the strategic region.
Shell confirmed an attack on its Nembe Creek trunk line at Awoba in Rivers state and said production had been affected but declined to say by how much.
The Anglo-Dutch energy giant said on May 10 that it was losing the equivalent of 30,000 barrels of crude oil per day because of recent attacks against its installations.
Nigeria is officially the world’s eighth-largest oil exporter but over the past two years its production has been cut by a quarter to about 2.1 million barrels a day because of the insurgent attacks.
Crude futures have risen by more than a third since the beginning of 2008 when they struck $100 for the first time, lifted by unrest in some of the oil-producing countries, falling energy inventories, high Asian demand for fuel and a weak dollar.
Reluctance by the Organisation of Petroleum Exporting Countries (Opec) members to hike their output has also helped keep prices high.
Opec president Chakib Khelil on Monday blamed the soaring price of oil on speculators, geopolitical problems and the weakness of the dollar, all “factors beyond the control” of Opec.
A falling dollar makes commodities such as oil cheaper for those with stronger currencies and so in part encourages demand.
“If Opec decides to raise production these hikes will not really lower the price,” said Khelil, who is also the Algerian energy minister.
Opec, which produces 40% of the world’s oil, has consistently said that the market is well supplied and that record prices reflect speculative investment activity rather than actual supply and demand conditions.
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First Published: Tue, May 27 2008. 08 50 AM IST
More Topics: Opec | Oil | Shell | Money Matters | Commodities |