Oil prices ease, though supply concerns remain

AFP
LONDON
Petroleumworld.com 01 16 06

World oil futures fell on Friday, mirroring price declines made by US natural gas, while markets remained concerned by the threat of supply disruptions in Iran and Nigeria, traders and analysts said.

New York's main contract, light sweet crude for delivery in February, dropped 49 cents to 63.45 dollars per barrel in pit deals.

On Thursday the contract had hit 65.05 dollars -- the highest point since October 3 on concerns that Iran, the world's fourth biggest exporter, would cut export supplies if referred to the UN Security Council over its nuclear enrichment programme.

Those fears were exacerbated by growing tensions in Nigeria, where Anglo-Dutch energy giant Shell said it was losing some 226,000 barrels per day after a major pipeline was sabotaged and four foreign oil workers abducted.

In London on Friday, the price of Brent North Sea crude for February delivery slid 14 cents to 62.48 dollars per barrel in electronic dealing.

It had reached 63.28 dollars the previous day for the first time since October 3.
Oil prices were falling Friday "on the back of the losses we've seen in natural gas prices in the US", ABN Amro trader Paul Goodhew said.

In New York on Friday, gas prices fell to 8.74 dollars per million British thermal units -- the lowest point for almost six months.

US natural gas prices have fallen from almost 16 dollars less than a month ago on the back of milder temperatures in the US northeast region, Goodhew added.
Despite Friday's price falls, markets continue to worry about Iran.

The Middle East country threatened Friday to end cooperation with the UN atomic watchdog over its nuclear programme if the issue is referred to the UN Security Council.

"Concern that the Iranian nuclear issue will soon involve the UN Security Council is potentially going to keep the (oil) market supported until it is resolved," analysts at the Sucden brokerage said.

"The major concern is that there is not enough spare production capacity in the world to cover any loss of production from Iran should any action be taken against it."

Iran, the second-biggest oil producer in the Organization of Petroleum Exporting Countries, exports some 4.2 million barrels per day.

Britain, France and Germany have called for Tehran to be referred to the UN Security Council for possible sanctions.

The European Union and the United States fear the country is secretly trying to develop a nuclear weapon -- a claim denied by Tehran.

Officials from the European Union, the US, China and Russia will meet over the crisis in London on Monday.

Iran sparked international fury this week for breaking UN seals on three nuclear facilities to resume nuclear fuel work.

Elsewhere, traders were keeping an eye on Nigeria amid unrest in the African country's southern Niger Delta.

"The impact of the shut-in is heightened by the fact that Nigeria produces sweet crude, which is in higher demand in the US because many of the refineries are set up to handle it rather than the heavy sour crude produced by many of the Middle East producers," Sucden analysts said.

Nigeria is Africa's largest producer with a daily output of 2.6 million barrels.

AFP 01/15/06

Copyright © 2006 AFP. All rights reserved

 

 

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