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Oil-News Roundup

May 13, 2006

Crude-oil prices fell to less than $73 a barrel on the New York Mercantile Exchange, despite continuing geopolitical worries and trouble in Nigeria, as traders apparently chose to cash in after oil's recent rally. Here is today's well of news about oil and energy.

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MORE TROUBLE IN NIGERIA: At least 150 people died when a ruptured gasoline pipeline exploded in southwestern Nigeria. It was the third disruptive incident in the region in as many days, though this seemed not to have been caused by militants, who earlier this week killed one foreign oil worker and kidnapped three others. Instead, the volatile fuel inside the pipeline simply exploded after a rupture, at a moment when several locals had surrounded it and were trying to gather the spilling gas for fuel or resale on the black market. Crude prices, which had fallen earlier in the morning after militants released the kidnapped oil workers, recovered a bit after the explosion. One cynical oil analyst said the incident, while tragic, was “not that big a deal from [a] supply perspective.” But Nigerian supply concerns are not going away any time soon. Militant attacks in the country have shut down about a fifth of its daily production, putting upward pressure on global crude prices. Today, the militant group Movement for the Emancipation of the Niger Delta vowed to attack a liquefied natural gas plant in Bonny.

SAGGING DEMAND FOR CRUDE: Also weighing on crude prices today was a report from the International Energy Agency slashing its forecast for growth in world oil demand this year by 15%, to 1.25 million barrels a day from 1.47 million. The IEA said soaring oil prices were finally starting to take their toll on the world's appetite for crude. Still, analysts said continuing supply concerns, geopolitical tensions and global economic growth should keep oil prices from falling too much.

Tense EU-Latin Summit: Venezuelan President Hugo Chavez and Bolivian President Evo Morales were hardly the belles of the ball at a summit of European Union, Latin American and Caribbean leaders in Vienna. Both men have recently nationalized their energy industries, raising the hackles of energy companies and leaders of big energy consuming nations.

High Corn: Booming demand for the gasoline additive ethanol will lift corn prices this year, the Agriculture Department said.

Gas Hedge: Gulf Oil CEO Joe Petrowski is developing a way for consumers to use prepaid cards to hedge against rising gasoline prices at Gulf stations, the Associated Press reports.

Commods Traders Wanted: Thanks to booming oil and other commodities prices, skilled commodities traders are in high demand in the world's financial centers, the Financial Times reports.

Congress the Enabler: Brookings Institution scholar Philip Gordon argues in a Financial Times opinion piece that Congress's proposed solutions to high energy prices are only enabling America's addiction to oil (subscription required).

Scooter Boom: High gasoline prices have fueled a boom in scooter use in the U.S., the Associated Press reports. “The funniest thing is pulling into a gas station behind an SUV and seeing them pay 75 bucks” to fill their gas tank, one New York City scooter enthusiast says. It takes about $5 to fill the tank of a typical Vespa-like vehicle.

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