Oil prices resume march upwards




AFP
NEW YORK
Petroleumworld.com 01 30 06

World oil prices rose strongly on Friday because of concerns for Middle East and African supplies and cold weather across Europe, analysts said.

The market was also gearing up for OPEC's latest meeting to discuss output levels next Tuesday in Vienna, where the oil-producing cartel is based.

New York's main contract, light sweet crude for delivery in March, climbed 1.50 dollars to close at 67.76 dollars a barrel.

In London, the price of Brent North Sea crude for March delivery gained 1.32 dollars to finish at 66.24 dollars a barrel.

"The menace of export disruption from multiple sources at once is a genuine possibility," Fimat analyst John Kiduff said.

"The (Palestinian election) victory by Hamas has to ramp up concerns about energy security in the world's major producing region," he said. "The essential economic determinants of price simply do not explain current levels."

Following a sharp fall in prices on Wednesday, crude futures had begun rebounding Thursday as traders focused on unrest in OPEC member Nigeria.

The abduction of four foreign workers combined with a series of deadly strikes against oil plants over the past three weeks has raised tensions in Africa's biggest oil exporter.

Anglo-Dutch energy giant Royal Dutch Shell has cut production by 221,000 barrels since the start of the crisis, depriving the oil market of a large quantity of highly prized light sweet crude.

Nigeria's problems have stoked concerns over how much spare capacity the Organisation of Petroleum Exporting Countries has, despite promises by OPEC kingpin Saudi Arabia to increase supplies if needed.

"Crude futures surged higher... on support from cold weather in Europe and concerns about supply disruption, shrugging off assurances from OPEC that it will keep on pumping," Sucden analysts said.

Market tensions have been exacerbated by the threat of UN sanctions hanging over Iran, OPEC's second-biggest exporter after Saudi Arabia, because of the Islamic republic's refusal to renounce its nuclear ambitions.

"Traders are looking at the Nigerian and Iranian issues. They don't like to sell at present," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.

Iran is expected to raise the spectre of oil interruptions against the West at next week's OPEC meeting by lobbying the cartel to cut exports of crude.

Iran has already warned that high oil prices would result from any attempt to impose sanctions as punishment for its defiance over its nuclear programme.

The United States and Europe fear that Iran's nuclear work could lead to the development of an atomic bomb, which could upset the balance of power in the politically volatile and oil-rich Middle East.

With the situations in Nigeria and Iran remaining volatile, Emori believes that oil prices are heading towards 70 dollars a barrel in the short term.

"People are not inclined to buy at 70 dollars a barrel at present, but once something happens, then they are likely to re-look at 70 dollars," he said.

Last August, following the devastation wrought by Hurricane Katrina on US Gulf Coast energy installations, prices struck record highs in nominal terms of 70.85 dollars a barrel in New York and 68.89 dollars in London.

AFP 01/27/06

Copyright © 2006 AFP. All rights reserved

 

 

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