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Oil prices shoot up on Nigeria concerns Thursday
By Isabelle Tourne
AFP
NEW YORK
Petroleumworld.com 07 28 06
Oil prices shot higher Thursday as jitters about supply disruptions in Nigeria added to concerns about the Middle East and US gasoline reserve levels.
New York's main contract, light sweet crude for delivery in September, climbed 60 cents to 74.54 dollars per barrel in closing trades.
In London, Brent North Sea crude for September delivery won 1.01 dollars to settle at 75.01 dollars per barrel.
"The market is concerned about what's happening in Nigeria," said Phil Flynn at Alaron Trading. "The threat is driving the prices up."
Crude production in Nigeria has been slashed by a total of 675,000 barrels per day, or 26 percent of the country's normal daily output, a source close to the oil sector told AFP on Thursday.
Nigeria produces 2.6 million barrels of oil per day under normal conditions, but a series of attacks by separatist rebels on oil companies in the Niger Delta region has hit the industry hard since the start of 2006.
The attacks, coupled with a recent leak in a pipeline run by Royal Dutch Shell, has slashed output.
The situation in the Middle East remained a worry as well, Flynn said.
"In Iran, the oil minister said that Iran would not cut exports if Syria was attacked but the market does not seem to be very convinced," he said.
Other factors included strong demand for gasoline in the US, Sucden analyst Michael Davies said.
Over the past four weeks, US demand for gasoline has risen by 1.8 percent from the same period in 2005, the US Department of Energy said on Wednesday.
This showed "once again that high pump prices are not hurting demand," Davies said.
Gasoline statistics are under heightened scrutiny because of peak US demand as many Americans hit the roads for their summer vacations.
The DoE added Wednesday that gasoline stocks dropped by 3.2 million barrels to 211 million in the week to July 21, while the market had expected no change.
US crude oil inventories were stable at 335.5 million barrels. Analysts had forecast a fall of 500,000 barrels.
"Product demand is the key to the fundamentals of this (oil) market, which is underpinned by tight spare capacity for complex refining and light sweet crude," Calyon analyst Mike Wittner said.
Market watchers were assessing the latest developments surrounding the military conflict between Israel and Hezbollah guerrillas in Lebanon.
The fighting in Lebanon showed little sign of abating Thursday after Israel lost nine soldiers in its biggest one-day toll so far, with world powers still at odds over a conflict now in its 16th day.
Concerns that the violence could spread to major crude-producing nations in the Middle East, such as Iran, saw oil prices soar to all-time highs above 78 dollars per barrel earlier this month.
AFP 27 1924 GMT 07 06
Copyright ©2006 AFP. All Rights Reserved.
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