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Oil prices jump on Nigeria kidnappings
AFP
NEW YORK
Petroleumworld.com 05 12 06
World crude prices rallied Thursday after supply concerns intensified on the abduction of three foreign workers in the Nigerian oil city of Port Harcourt, dealers said.
New York's main contract, light sweet crude for delivery in June, gained 1.19 dollars to close at 73.32 dollars a barrel.
In London, Brent North Sea crude for June delivery rose 99 cents to settle at 73.43 dollars a barrel.
Oil prices, already near record highs because of Iran's nuclear crisis and tight gasoline supplies in the United States, gained momentum on news of the kidnappings in Nigeria.
The abductions occurred a day after another foreign worker was shot dead in Nigeria, Africa's biggest producer of crude, which has seen separatist militants wage a campaign of deadly attacks on security forces.
Officials said the three men work for Saipem Contracting Nigeria Ltd, a subsidiary of Italian company ENI in Port Harcourt. At least one is Italian and another Indian, they said.
Thirteen expatriate oil workers were abducted in two incidents earlier this year but were released after weeks of negotiations between the Nigerian government, community leaders and the militants.
Attacks since January by a group known as the Movement for the Emancipation of the Niger Delta have cut Nigeria's exports of 2.6 million barrels per day by around a quarter, helping to force up world prices.
"The crude market is still in a bullish trend," Man Financial senior energy broker Robert Laughlin said.
Prior to the Nigerian news, crude futures had risen owing to refinery problems in the United States, analysts said.
Crude futures closed more than a dollar higher Wednesday after two key US refineries were hit by production outages.
"News of problems at Valero's Texas City refinery and ConocoPhillips' Bayway refinery in New Jersey triggered gains as it reignited worries about a refinery bottleneck again forming this year," Sucden analysts said in London.
Gasoline, or petrol, is a key market focus because the so-called US driving season begins at the end of this month, when demand hits a peak owing to many Americans taking to the roads for annual holidays.
Recent high oil prices have also been caused by global supply concerns linked to Iran, the world's fourth biggest producer of crude, whose nuclear ambitions have triggered a diplomatic crisis.
Market participants fear that the Islamic republic may slash exports and send oil prices rocketing should action be taken against its disputed nuclear energy programme.
UN nuclear chief Mohamed ElBaradei said Thursday he was "optimistic" about the fact the United States had given its European allies more time to seek a solution to the crisis.
Washington, which has failed to win support for UN sanctions against Iran, announced Wednesday it would give Britain, France and Germany "a couple of weeks" to draft a new approach to getting Iran to drop its nuclear activities.
Iran is the second-biggest producer in the Organization of the Petroleum Exporting Countries after kingpin Saudi Arabia.
Another factor supporting higher prices is a US government requirement this year for refineries to replace the additive MTBE, which is a recognized health risk, with ethanol in gasoline.
Some analysts fear the initiative may slow production at refineries this summer. But James Williams at WTRG Economics said those fears were overblown.
"In summary we do not think there will be a problem. Production is up and stocks are either in place or on the way. The market is overreacting," he said.
AFP 11 2017 GMT 05 06
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