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Oil prices rocket as supply fears deepen
AFP
NEW YORK
Petroleumworld.com 03 29 06World oil prices vaulted above 66 dollars a barrel here on Tuesday as violence in Nigeria, falling US crude inventories and Iran's nuclear programme fed a speculative frenzy.
New York's main contract, light sweet crude for delivery in May, jumped 1.91 dollars to close at 66.07 dollars a barrel. It was the market's highest point in nearly two months.
In London, the price of Brent North Sea crude for May delivery soared 1.36 dollars to a finish of 64.97 dollars a barrel.
"It was an explosive day. We had a little bit of everything," Alaron Trading analyst Phil Flynn said.
Aside from the geopolitical factors, Flynn said prices were driven higher on talk that the American Stock Exchange (Amex) may launch trading in an oil fund on top of the futures contracts traded on the New York Mercantile Exchange.
"We saw what happened when the silver funds where speculated on (the Amex) and that drove silver higher," he said.
Traders said they saw no end in sight to the oil market's bull run, which has accelerated as demand for gasoline picks up in the run-up to the US summer driving season.
"Overall, we continue to favour upside risk in the oil market," Barclays Capital analyst Kevin Norrish said in London. "We would expect the potential for further chaos in Nigeria."
On Monday, Nigerian separatist guerrillas had released three kidnapped oil workers -- two Americans and a Briton -- after holding them hostage for more than a month, but warned of more attacks to come.
The men were among a group of nine foreign workers kidnapped on February 18 by heavily-armed militants fighting for control of the Niger Delta's oil resources. The other six men were released after a week.
Nigeria, the biggest producer of crude oil in Africa, has seen output cut by more than 20 percent as a result of attacks on oil installations in the delta.
"After the hostages were released, it kind of eased some of the tension," said Tony Nunan, an energy risk manager for Mitsubishi Corp. in Tokyo.
But the continuing threats to supplies in Nigeria are "very much real and in the background", Nunan added.
Meanwhile, the US Department of Energy was due Wednesday to publish its latest weekly report on energy stockpiles.
Analysts forecast that US crude inventories rose by 1.8 million barrels in the week ending March 24. However they predict stockpiles of gasoline to have fallen.
Ahead of the summer driving season beginning in May, when American drivers take to the roads on vacation, falls in US inventories of gasoline underpin oil prices.
The market was also tracking another supply concern -- the ongoing dispute over Iran's nuclear ambitions.
Russian Defence Minister Sergei Ivanov called on Tuesday for an "unambiguous" reply from Iran on a uranium enrichment offer designed to help resolve the international standoff.
Key members of the United Nations Security Council reported some progress in efforts to agree a statement urging Iran to come clean on its nuclear programme.
But Iran, the second-biggest producer of crude in the Organization of Petroleum Exporting Countries, has warned that it could retaliate against any UN punishment by cutting its crude exports.
AFP 28 03 06 2151 GMTCopyright © 1994-2006 Agence France-Presse. All Rights Reserved.
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