[AFRICA] Crude Oil Trades Near $125 After Attack on Nigerian Pipeline
Crude oil traded near $125 a barrel in New York after rising 1.2 percent yesterday as Royal Dutch Shell Plc reduced Nigerian production because of an attack on a pipeline by militants.
Nigeria's main militant group, the Movement for the Emancipation of the Niger Delta, claimed responsibility for the attack. The incident occurred on the Nembe Creek trunk line, and Shell said it had to cut some output without specifying the amount of production lost.
``The Nigerian attacks galvanized support on the supply side,'' said Gerard Burg, energy and minerals economist with National Australia Bank Ltd. in Melbourne. ``Price declines in the past few weeks were demand-related, but supply issues, which have been the key driver for prices this year, are back in the headlines.''
Crude oil for September delivery rose 31 cents to $125.04 a barrel at 11:50 a.m. Singapore time on the New York Mercantile Exchange. Earlier, it gained 86 cents, or 0.7 percent, to $125.59. Oil has increased 63 percent in the past year. Yesterday, crude climbed $1.47, or 1.2 percent, to $124.73.
Prices have dropped more than $20 from the record $147.27 a barrel reached on July 11 on concern that high prices have cut demand for fuel in the U.S., the world's largest energy consumer. The nation's motorists drove less in May than a year earlier, a seventh consecutive monthly drop, the Federal Highway Administration reported yesterday.
The International Monetary Fund yesterday said there's no end in sight to the U.S. housing recession and warned that deteriorating credit conditions for consumers and banks may prolong a period of slow economic growth.
``Consumers are responding to higher oil prices and are changing their habits,'' National Australia's Burg said.
Nigerian Attacks Brent crude oil for September settlement rose 31 cents to $126.15 a barrel at 11:35 a.m. Singapore time on London's ICE Futures Europe exchange. Yesterday, the contract gained $1.32, or 1.1 percent, to $125.84.
The Nigerian pipeline attacks occurred at 1:15 a.m. local time yesterday, Movement for the Emancipation of the Niger Delta spokesman Jomo Gbomo said in an e-mailed statement. Assaults on Nigerian oil facilities have cut output by 20 percent since 2006 and reduced the country to the status of Africa's second-largest producer, after Angola.
Iran's President Mahmoud Ahmadinejad said his country has 6,000 uranium-enriching centrifuges, the Associated Press reported July 27. The Middle East's second-largest producer of oil has threatened to blockade the Strait of Hormuz, the export channel for a quarter of the world's crude oil, if its nuclear facilities are targeted.
Organization of Petroleum Exporting Countries President Chakib Khelil said in Jakarta today the producer group wants to ensure adequate oil supply to consumers and there isn't any need to cut production.
``We are not worried with any price because we don't decide the price,'' he said. ``We just meet the demand.''
The Organization of Petroleum Exporting Countries will meet in Vienna on Sept. 9. The group left production unchanged at its past three meetings in December, February and March.