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Oil prices slide despite Nigeria supply fears
AFP
NEW YORK
Petroleumworld.com 04 25 07World oil prices fell heavily on Tuesday, as traders consolidated despite market nerves over lost production in Nigeria, the world's sixth biggest exporter of crude.
New York's main oil futures contract, light sweet crude for delivery in June, closed down 1.31 dollars at 64.58 dollars per barrel.
In London, the price of Brent North Sea crude for June delivery settled down 99 cents at 67.16 dollars per barrel.
Prices unwound "following a large selling order. It's all very sudden," said a broker at Bache Financial in London. "There seems to be no reason for this price move."
Prices had risen earlier on Tuesday owing to concerns about Nigerian supplies.
Ruling party candidate Umaru Yar'Adua won Nigeria's presidential election on Monday but foreign observers questioned the credibility of a vote that, along with state polls the week before, claimed at least 200 lives.
Opposition parties rejected the result, raising the political risk level in a major oil producer and Africa's most populous nation.
Nigeria's current oil production is down an estimated 25 percent owing to violence in the oil-rich Niger Delta.
"There's always going to be a risk associated with Delta production, although Shell's talking about going back and potentially restarting production," Global Insight analyst Simon Wardell said.
"I think that at any time you could start to see an upsurge in violence and that could put plans to restart oil-on-hold, potentially even hit the oil which is currently being produced.
"It lowers risk if you have people accepting the results and trying to work together, but I'm not sure it's in the immediate future," Wardell added.
Yar'Adua faced growing discontent on Tuesday after being declared the winner of a disputed poll that even the outgoing head of state admitted was far from perfect.
"The situation in the oil market is still uncertain because of the election in Nigeria and production in Nigeria has been missing," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Emori said nobody really knows the true nature of outages in the Delta region and the market fears that even more production could be disrupted.
"That's why the market is quite nervous at the moment," he said.
The market is also concerned about high US gasoline (petrol) demand and insufficient production by the Organisation of the Petroleum Exporting Countries (OPEC), Emori said.
London-based energy analysts, The Centre for Global Energy Studies (CGES), on Monday said reduced OPEC production risks another damaging price spike this year.
Emori said OPEC must make up the production shortfall from Nigeria by increasing output to avoid prices rising to around 70 dollars.
He said the weekly US Department of Energy inventory report to be released on Wednesday is expected to confirm concerns over US gasoline demand.
"Gasoline demand in the US is at a much higher level than last year," Emori said.
AFP 24 1957 GMT 04 07
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