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Oil prices drop after Bush comments
By Antoine Agasse
AFP
NEW YORK
Petroleumworld.com 04 26 06
Oil prices retreated in New York Tuesday after US President George W. Bush announced a decision to suspend deposits into the US strategic oil reserves.
Earlier on Tuesday, prices had raced towards record highs owing to tensions in major crude producers Nigeria and Iran.
New York's new main contract, light sweet crude for delivery in June, shed 45 cents to 72.88 dollars per barrel in closing trades after hitting a high for the session of 74.00 dollars.
In London on Tuesday, the price of Brent North Sea crude for June delivery edged up 21 cents to close at 73.21 dollars per barrel in after an intraday high of 74.02 dollars.
Prices have come down from all-time records of 75.35 dollars per barrel in New York and 74.79 dollars in London.
Oil analyst Jim Ritterbusch, of Ritterbusch and Associates, said Bush's decision about US reserves was "the driving force behind the drop" in prices, but added that fundamentally nothing had changed.
"The ability of the June crude contract to hold above the 72.65-dollar level overnight (Monday/Tuesday) reinforces our belief that fresh highs will be achieved across the complex," he said.
James Williams at WTRG Economics agreed, saying the US president's move "might have a psychological impact short term," adding: "realistically we are not talking about that much crude oil and it's not going to change the supply-demand balance."
In a wide-ranging speech on strategies to combat rocketing fuel prices, Bush said Tuesday: "One immediate way we can signal to people we're serious about increasing supply is to stop making purchases or deposits to the strategic supply for a short time.
"The strategic reserve is large enough to guard against any major supply disruption over the next few months."
The US Strategic Petroleum Reserve was created in 1975 by then-president Gerald Ford to ensure an emergency supply of oil during that decade's price shocks created by war and tensions in the Middle East.
Earlier Tuesday, prices spiked after US energy giant ExxonMobil said it had evacuated non-essential staff from Nigeria's largest oil export terminal amid fears it could be attacked by armed militants.
ExxonMobil's Qua Iboe facility handles exports of 650,000 barrels per day, though the firm's Nigerian spokesman, Yemi Fakayejo, told AFP that output had not yet been hit by the latest scare.
Traders are nervous of further supply outages in Nigeria, Africa's biggest producer of crude, where around 20.0 percent of output is offline owing to rebel attacks on energy infrastructures in the southern Niger Delta.
"If it is true that ExxonMobil fears further attacks, it implies that we could lose another, say, 20.0-percent of Nigeria production," Societe Generale analyst Deborah White said.
She added: "It does not affect their export capacity for the present, but the story is very worrying."
Attacks by separatist guerrillas over the past three months have slashed Nigeria's exports, which usually stand at 2.5 million barrels per day.
Disruptions to exports of Nigerian light sweet crude oil is of particular concern in the run-up to the US driving season which starts at the end of May.
Although consumers have access to large supplies of heavy, sour crude, refiners prefer light, sweet oil because of its low sulphur content and relatively high yields of gasoline, heating oil as well as diesel and jet fuel.
Demand for gasoline hits top gear next month, when many Americans take to their cars on vacation for the so-called summer driving season in the United States.
Elsewhere on Tuesday, Iran refused to rule out using oil as a weapon in the worsening international standoff over the Islamic republic's disputed nuclear drive.
The warning came as the head of Iran's nuclear agency, Vice President Gholam Reza Aghazadeh, was to hold last-minute talks Wednesday with the United Nations nuclear watchdog, two days before a UN deadline for Tehran to suspend uranium enrichment.
AFP 04 25 06 1946 GMTCopyright © 1994-2006 Agence France-Presse. All Rights Reserved.
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