Daily Telegraph: Oil prices touch high as Shell workers strike: “Strikes by oil workers in Nigeria sent the price of crude above $49 a barrel in London for the first time yesterday. The members of two oil unions unexpectedly downed tools at Shell's production facilities in a two-day protest against job cuts.” (ShellNews.net)
By Malcolm Moore, Economics Correspondent (Filed: 08/10/2004)
Strikes by oil workers in Nigeria sent the price of crude above $49 a barrel in London for the first time yesterday.
The members of two oil unions unexpectedly downed tools at Shell's production facilities in a two-day protest against job cuts.
Traders bargain in the oil pit at the New York Mercantile Exchange
The strikes came a day after the country's main oil workers' union said its members would cease work on Sunday if fuel prices were not cut. Shell said its production had not yet been affected.
In London, the price of a barrel of Brent Crude for delivery in November rose to over $49 before falling back to $48.80, up 81 cents in late trading. In New York, the price rose 83 cents a barrel to $52.85.
The 2m barrels of oil a day which Nigeria produces are particularly prized by the United States because of their low sulphur content, which makes the oil easier to refine.
The price of oil has broken records repeatedly in the past two weeks on fears that the US will run short over the peak winter season. The damage from Hurricane Ivan has shut in 500,000 barrels of oil a day from the Gulf of Mexico and yesterday the US Energy Department said that the damage could take up to 90 days more to fix.
Crude oil stockpiles rose only by 1.1m barrels to 274m last week, according to the Energy Department. Supplies of heating oil fell by 2.1m barrels to 123.4m. Several analysts, including Kevin Norrish at Barclays Capital and Steve Strongin at Goldman Sachs, expected the supply disruptions and cold weather ahead to drive the price of oil in New York above $60 a barrel. Mr Norrish also said that "trading volumes are reasonably liquid".
Manufacturers, who have been hit by the high price, said yesterday they were relieved by the Bank of England's decision to keep interest rates on hold at 4.75pc.
Steve Radley, chief economist at the EEF manufacturer's organisation, said: "With the business outlook becoming more uncertain, the MPC is wise to keep rates on hold. If recent trends continue, we may be closer to the peak on rates than previously thought."
Roger Bootle, the head of Capital Economics, said the decision was no surprise and would "strengthen the suspicion that interest rates are already at their peak. They may be, although I think that there is probably still one more rise to come, perhaps in November." Economists at Goldman Sachs believe that there will be one more rise, but think it will come next year.
The European Central Bank also decided to continue to hold rates, which have been unchanged since June 2003, at 2pc. Several countries within the eurozone, including France and Spain, have expressed fears that a high oil price will damage their economic growth.
Yesterday, Jean-Claude Trichet, the president of the ECB, said that if prices "remain high or even increase further, it could dampen the strength of the recovery inside and outside the euro area." The ECB is not expected to raise interest rates until next year at the earliest.