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Crude hits new highs on Nigerian fears

Financial Times: Crude hits new highs on Nigerian fears: “Crude oil hit $50 a barrel in after-hours trading in New York on Monday evening…”: “Royal Dutch/Shell Group said it had shut up to 40,000 barrels per day of oil production for security reasons. Shell last week evacuated 235 staff from two oilfields as government troops launched raids on nearby communities to track down militants.”

By Kevin Morrison

Posted 28 Sept 04

Crude oil hit $50 a barrel in after-hours trading in New York on Monday evening on concern about supply disruptions in Nigeria, where rebels are threatening an uprising in the oil-producing region.

The latest unrest in Nigeria comes when oil markets are already concerned about supply issues in Iraq and Russia.

“While such periodic unrest has become somewhat common, the disturbance comes atop already heightened concerns about supply availability headed towards the northern hemisphere winter,” said Michael Rothman, chief energy strategist at Merrill Lynch.

Royal Dutch/Shell Group said it had shut up to 40,000 barrels per day of oil production for security reasons. Shell last week evacuated 235 staff from two oilfields as government troops launched raids on nearby communities to track down militants.

Shell’s output loss follows a 10 per cent drop in Nigerian output last month.

Edmund Daukoru, presidential adviser on petroleum, told Reuters Nigeria had reduced supply to base capacity of 2.25m b/d. It had been pumping at full capacity of 2.5m b/d until July to take advantage of record high oil prices, but analysts said the output surge took a heavy toll on ageing oil infrastructure.

Brent crude futures broke through $46 a barrel for the first time on Monday. IPE Brent for November delivery hit $46.28 a barrel in early afternoon London trading, before easing to close at $45.93, a rise of 60 cents on the day.

US crude futures came close to breaking the $50 a barrel level in regular trading hours. November Nymex WTI hit a fresh record high of $49.75, up from its settlement on Friday of $48.88, before easing to $49.64 a barrel, a gain of 76 cents on the day. Later, In after-hours trading in New York, crude briefly reached $50.00 a barrel, the highest in the 21 years oil futures have traded on the exchange, before falling back to $49.85.

While the focus has switched to Nigerian oil supply disruptions, Iraq was reported to increased oil exports with flows currently estimated at 2.5m b/d. Exports through the northern pipeline were estimated at up to 500,000 b/d, and about 2m b/d from the southern terminals in Basra.

Opec oil producers have raised production by 600,000 b/d to 30.5m b/d in September, according to energy consultancy Petrologistics. It said top Opec producer Saudi Arabia lifted supply by 500,000 b/d to 9.75m b/d.

Speculative funds doubled their net long position in Nymex crude from 13,198 to 26,742 contracts in the week to September 21, although this is less than half of the peak in the speculative long position held in March.

Gold prices firmed to $409.15/$409.90 a troy ounce in late afternoon London trade, up from the late quote of $407.55/$408.30 in New York on Friday.

Platinum matched the three-week high of $855 a troy ounce reached on Friday, after South African unions issued 48-hour strike notices against the two biggest producers, Angloplat and Implats, over wages.

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