Crude gains $1/bbl on supply fears, Nigeria

27 May 2008 10:12  [Source: ICIS news]

SINGAPORE (ICIS news)--ICE Brent futures rose by more than $1/bbl on Tuesday to above $133/bbl amid heightened supply fears following an attack by militants on a crude pipeline in the oil producing delta region of Nigeria.

At 8:04 GMT on Tuesday, July ICE Brent futures were traded at $133.13/bbl, up 76 cents/bbl on the previous settlement price. The contract had earlier hit a high of $133.41/bbl, up $1.04/bbl.

At the same time, July NYMEX light sweet crude futures were assessed at $133.52/bbl, up $1.33/bbl on last Friday’s settlement level. Earlier the contract peaked at $133.64/bbl, up $1.45/bbl on last Friday’s close.

There was no settlement for NYMEX light sweet crude futures on Monday due to the Memorial Day public holiday in the US.

An attack on a pipeline that carries crude to the Bonny export terminal in the southern delta region of Nigeria on Monday resulted in Shell having to shut-in some output.

The attack came as Shell was in the process of repairing damage to the Bonny pipeline system caused by an earlier attack in late April. That attack led to Shell shutting in some 164,000 bbl/day of Bonny Light production.

Supply of crude from Nigeria, the world's eighth-largest oil exporter, has been cut since February 2006 following a series of militant attacks on the country's oil industry. It is estimated that 564,000 bbl/day of Nigerian production is shut-in due to militant attacks and sabotage.

Supply concerns were also raised by a shut-in of around 138,000 bbl/day of North Sea production over the weekend following a leakage of oil. However the operator, StatoilHydro, restarted all but 19,000 bbl/day of this production on Monday.

Meanwhile on Monday, OPEC President Chakib Khelil re-iterated that the organisation did not plan to meet again until September, despite the record high rise in crude prices. OPEC continues to blame high prices on speculation and the weak US dollar and believes that the market is well supplied with crude.

By: James Dennis
+65 6780 4359

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