New Zealand Herald: Oil: New high on winter worries and Nigeria: "Where it ends, who knows?" said Jan Stuart, an analyst with Fimat USA. "What's going to happen when the winter hits? I'd say we have a better than fifty-fifty chance of hitting US$60 by year end.": “Nigerian oil unions began an unexpected two-day strike at Royal Dutch Shell Group facilities to protest feared job cuts.” (ShellNews.net)
08.10.2004
LONDON - Oil prices scaled new heights at US$53 for US crude on Thursday on concerns over tight northern hemisphere winter heating fuel supplies and an unexpected strike at Nigerian oil terminals.
US light crude set a record at US$53 a barrel -- marking a surge of US$20, or more than 60 per cent, this year -- before settling at US$52.67 for a gain of 65 cents. London crude also struck a new peak, at US$49.20 a barrel, before ending at US$48.90 a barrel, up 91 cents.
"Where it ends, who knows?" said Jan Stuart, an analyst with Fimat USA. "What's going to happen when the winter hits? I'd say we have a better than fifty-fifty chance of hitting US$60 by year end."
Prices this year have rocketed as China's economic expansion drives the fastest world demand growth in a generation, stretching crude production and refinery capacity and leaving no cushion to cope with supply problems.
Thursday a new threat emerged in Nigeria, a major Opec producer and a supplier of high-quality crude grades prized for their yield of transportation fuels.
Nigerian oil unions began an unexpected two-day strike at Royal Dutch Shell Group facilities to protest feared job cuts.
Shell, which pumps about 1 million barrels a day of Nigeria's 2.3 million bpd output, said exports had not been affected, but independent port inspector SGS said in a note to clients the strike meant loadings would be put "on hold."
In Norway, oil rig workers said they would widen a three-month strike Saturday by closing another North Sea field and increasing the amount of output hit to 55,000 bpd. Plans for new output have also been delayed.
US supply worries have intensified after Hurricane Ivan cut September US crude production to its lowest in any month since 1950 and disrupted operations at refineries along the Gulf Coast.
About 28 per cent, 475,000 bpd, of crude output in the Gulf of Mexico still remains shut due to storm damage.
The hurricane hit Gulf Coast refineries, where plants were still working at only 89 per cent of capacity last week, hindering efforts to build refined product stocks for winter.
US government data Wednesday showed heating oil stocks 6 per cent lower than a year ago. Stocks of heating fuel in major European and Asian importing nations are also below normal for the time of year.
"The tightness of the crude market has transferred itself to products in the States and with winter ahead distillates are beginning to give cause for genuine concern," said independent energy consultant Geoff Pyne.
Economists continue to put a brave face on the impact of higher fuel costs on economic growth and inflation.
US Federal Reserve official Thomas Hoenig said on Wednesday that he was not unduly worried about the impact of high oil prices on either the US economy or inflation.
"As long as oil prices don't get significantly higher than they are now, about US$50 a barrel, their likely effects should remain relatively modest," said Hoenig.
"Even with US$50-plus oil, the market appears able to digest this so far, with the stock market holding up strong so far this week," said Oscar Nelson, who trades for the US$180 million global resources fund at Texas-based US Global Investor.
But some officials are beginning to admit concern.
David Robinson, deputy research director at the International Monetary Fund, warned Thursday that tight oil supplies could leave the global economy worryingly vulnerable for years to come.
- REUTERS