Crude-oil prices rise as Nigeria unrest, Wednesday, May 10, 2006
Crude-oil prices rise as Nigeria unrest, refinery snag trump growing supplies
WASHINGTON (AP) - Crude futures jumped above $72 US a barrel Wednesday after the fatal shooting of an American oil worker in Nigeria and a refinery snag in Texas exacerbated supply concerns.
The rally came in spite of U.S. government data released Wednesday that showed an increase in oil and gasoline supplies, highlighting just how nervous the market remains about everything from geopolitics to the weather.
At about $70 a barrel, oil futures prices have been supported for weeks by concerns ranging from the West's diplomatic confrontation with Iran, a thin supply cushion and the coming hurricane season, among other factors.
"The market is so jittery right now," said BNP Paribas Commodity Futures broker Tom Bentz, one of several market participants who said prices may take yet another run at last month's record above $75 a barrel.
Light, sweet crude for June delivery rose $1.44 to settle at $72.13 a barrel on the New York Mercantile Exchange, where gasoline futures rose 12.28 cents to settle at $2.1694 a gallon.
In London, June Brent crude futures gained $1.36 to settle at $72.44 a barrel.
With global demand strong and the supply cushion thin, traders also remain worried about output losses of 500,000 barrels per day in Nigeria, where Royal Dutch Shell PLC has shut production out of safety concerns, and more than 300,000 barrels per day the Gulf of Mexico, which was pummelled by hurricanes last summer.
Police in Port Harcourt, Nigeria said Wednesday a gunman riding a motorcycle shot to death a man working in Nigeria for the Houston-based drilling services company Baker Hughes Inc. The victim was riding in a car to his office when he was shot, police said.
"The Nigerian rebels have just raised the stakes a little bit, assuming that this killing is credited to the militants," said Alaron Trading Corp. analyst Phil Flynn.
On Tuesday, a new militant movement whose attacks on oil installations have cut more than 20 per cent of Nigeria's of 2.5 million daily barrel production said it would target oil workers with fresh attacks.
But the Movement for the Emancipation of the Niger Delta said in an e-mail to The Associated Press that it was not responsible for the slaying.
The market also reacted to word from Valero Energy Corp. that a 50,000-barrel-per-day unit at a refinery in Texas City, Texas, would be undergoing repairs for the next several days, reducing gasoline output by 15,000 barrels per day.
In its weekly petroleum report, the Energy Department said crude-oil inventories rose last week by 300,000 barrels to 347 million barrels, or roughly five per cent above year ago levels. Gasoline inventories climbed by 2.4 million barrels to 205.1 million barrels, or almost four per cent below last year.
The report showed refinery capacity utilization climbed last week by 1.4 per cent to 90.2 per cent. Gasoline demand over the past four weeks averaged 9.14 million barrels per day, slightly lower than the same period a year ago.
Many analysts have attributed the sluggish consumption to rising prices, while others suggest the data are misleading given the phaseout of a gasoline additive and the increase of ethanol in the country's fuel mix.
Tom Kloza, publisher of the Oil Price Information Service in Wall, N.J., said both groups of analysts are right.
"These are not statistics that have great clarity now," he said. "And uncertainty tends to manifest itself as higher prices."
Iran's hard-line president on Wednesday dismissed Western concerns over its nuclear program as "a big lie," even as other voices in the regime appeared to suggest that international cooperation was possible.
In other Nymex trading, heating oil futures gained 6.96 cents to settle at $2.0647 per gallon, while natural gas futures climbed 31.9 cents to close at $6.9 per 1,000 cubic feet.