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THE NEW YORK TIMES: Oil Touches 7 – Week High on Renewed Supply Woes

Mar 25th, 2006
by admin.

By REUTERS
LONDON (Reuters) – Oil held above $64 a barrel after hitting a near seven-week high on Friday as renewed supply woes in Nigeria increased expectations of prolonged outages in Africa's largest producer.
Oil in New York surged 3.5 percent on Thursday after Italian energy firm Eni said it could not honor crude oil export commitments from its Nigerian Brass River terminal, after a pipeline attack last week.
“I'd be expecting Nigerian outages to last for another couple of months,'' said Deborah White of SG CIB Commodities in Paris. “It's not particularly that the situation has deteriorated, but it is indeed quite serious.''
U.S. light crude for May delivery (CLc1) settled 35 cents higher at $64.26 a barrel. It hit a peak of $64.75 earlier Friday, the highest since February 7.
London Brent crude (LCOc1) settled 24 cents higher at $63.51 after a surge of $1.76 the previous day.
Eni's Brass River terminal loads around 200,000 barrels per day (bpd). The pipeline blast shut in 75,000 bpd of Eni's Nigerian output, but the company said on Thursday that if all went well, it could be repaired within a week.
Exports from Nigeria, a member of the Organization of the Petroleum Exporting Countries and Africa's largest producer, have been cut back by attacks on oil installations there. Royal Dutch Shell and other companies already have shut down 630,000 bpd of production, 26 percent of the capacity in the world's eighth-largest crude exporter.
NIGERIA
On Wednesday, a senior global maritime analyst at the U.S. Office of Naval Intelligence, Charles Dragonette, told a conference that Nigeria was no longer able to ensure security in the delta region where it pumps most of its crude.
Oil production from the African country will “hang precariously in the balance'' for some time, he said.
Crude oil has traded in a range of $60-$64 this week as traders' focus shifted between ample U.S. crude inventories and concern about real or threatened supply disruptions, including tensions over Iran's nuclear program.
Despite a surprise decline last week, U.S. crude oil inventories stayed near seven-year highs, or 9 percent above those of a year earlier.
“A force majeure declaration by Eni on its Nigerian crude exports, strong technical support and some delayed reaction to yesterday's U.S. stocks data all pushed prices in the same direction,'' said David Thurtell of Commonwealth Bank of Australia in Sydney, of Thursday's price jump.
Traders also appeared to be shifting focus to expected lower refinery production in the U.S., the world's largest gas guzzler, due to planned maintenance and unplanned outages.
Oil prices are sensitive to any disruption to gasoline supplies from U.S. plants ahead of summer, when demand usually peaks for the motor fuel.
Exxon Mobil Corp. will close for routine work in May a gasoline-producing unit at the largest refinery in the mainland U.S, according to traders. The one-month shutdown of the unit at the 564,000-bpd refinery in Baytown, Texas, is for planned work.
On Wednesday, Exxon shut down a crude unit and a coker at its refinery in Baton Rouge, Louisiana for 32 days, the company confirmed.

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