Oil Rises as Saudi Pledge Fails to Ease Nigeria Supply Concern
By Mark Shenk
June 23 (Bloomberg) -- Crude oil rose on signs that Saudi Arabia's output increase may not raise global supply enough to make up for production disruptions in Nigeria.
Attacks on a Royal Dutch Shell Plc platform and a Chevron Corp. pipeline last week halted 300,000 barrels a day of Nigerian output. Nigeria's white-collar oil union began a strike against Chevron today. Saudi Arabia will pump an extra 200,000 barrels a day next month, Oil Minister Ali al-Naimi said yesterday.
``The attack on the offshore platform and the Chevron pipeline point to an escalation,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``The Saudi news was widely expected, so it's had little effect. There were some hopes for a more substantial increase.''
Crude oil for August delivery rose $1.74, or 1.3 percent, to $137.10 a barrel at 11:31 a.m. on the New York Mercantile Exchange. Prices touched a record $139.89 on June 16.
An attack on Shell's Bonga platform, off the coast of Nigeria, on June 19 may halt deliveries for as long as six weeks, the company said last week. The field produces about 190,000 barrels a day. Chevron halted 120,000 barrels a day of onshore production after its pipeline was blown up last week.
After the latest round of attacks, the Movement for the Emancipation of the Niger Delta said it will declare a cease-fire starting tomorrow to ``give peace and dialogue another chance.'' Action against foreign oil companies in Nigeria will end at midnight local time tomorrow, the group said in a statement yesterday.
High Quality Oil
``If the truce comes true it will be very big news,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``It would be very bearish for the markets because a great deal of high quality, distillate rich, crude would be made available.''
Nigeria produces low-sulfur, or sweet, oils prized by refiners because of the high proportion of gasoline and distillate fuels it yields. Distillate fuel is a category that includes heating oil and diesel.
``The employees belonging to the Petroleum and Natural Gas Senior Staff Association of Nigeria have declared a work stoppage,'' Chevron spokeswoman Margaret Cooper said today in a statement.
Cooper said it's too early to comment on the impact of the strike on operations. Chevron in 2007 produced about 350,000 barrels of oil a day from its 32 fields in Nigeria, according to the company's Web site.
Jonathan Omare, secretary of the local Chevron union, said a full-scale strike had begun, though production was not yet affected. ``The strike is everywhere,'' Omare said by telephone. `Nobody's working apart from the guys in the field.''
Saudi Increase
Saudi Arabia first pledged to increase production by 200,000 barrels a day after a meeting between King Abdullah and United Nations Secretary-General Ban Ki-Moon that was reported on June 16. The kingdom will offer more oil if there is demand and also plans to increase its production capacity to 12.5 million barrels a day by the end of next year, al-Naimi said yesterday.
``People were expecting an increase of about this size, so it's a minor element in the market today,'' Lynch said. ``There would have had to be an increase of 1 million barrels to have a major impact.''
Saudi Arabia may need to sell its oil cheaply to complete deliveries after proposing its production increase, the London- based Centre for Global Energy Studies said in a monthly report today.
Brent crude oil for August settlement rose $1.54, or 1.1 percent, to $136.40 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.
By Mark Shenk
June 23 (Bloomberg) -- Crude oil rose on signs that Saudi Arabia's output increase may not raise global supply enough to make up for production disruptions in Nigeria.
Attacks on a Royal Dutch Shell Plc platform and a Chevron Corp. pipeline last week halted 300,000 barrels a day of Nigerian output. Nigeria's white-collar oil union began a strike against Chevron today. Saudi Arabia will pump an extra 200,000 barrels a day next month, Oil Minister Ali al-Naimi said yesterday.
``The attack on the offshore platform and the Chevron pipeline point to an escalation,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``The Saudi news was widely expected, so it's had little effect. There were some hopes for a more substantial increase.''
Crude oil for August delivery rose $1.74, or 1.3 percent, to $137.10 a barrel at 11:31 a.m. on the New York Mercantile Exchange. Prices touched a record $139.89 on June 16.
An attack on Shell's Bonga platform, off the coast of Nigeria, on June 19 may halt deliveries for as long as six weeks, the company said last week. The field produces about 190,000 barrels a day. Chevron halted 120,000 barrels a day of onshore production after its pipeline was blown up last week.
After the latest round of attacks, the Movement for the Emancipation of the Niger Delta said it will declare a cease-fire starting tomorrow to ``give peace and dialogue another chance.'' Action against foreign oil companies in Nigeria will end at midnight local time tomorrow, the group said in a statement yesterday.
High Quality Oil
``If the truce comes true it will be very big news,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``It would be very bearish for the markets because a great deal of high quality, distillate rich, crude would be made available.''
Nigeria produces low-sulfur, or sweet, oils prized by refiners because of the high proportion of gasoline and distillate fuels it yields. Distillate fuel is a category that includes heating oil and diesel.
``The employees belonging to the Petroleum and Natural Gas Senior Staff Association of Nigeria have declared a work stoppage,'' Chevron spokeswoman Margaret Cooper said today in a statement.
Cooper said it's too early to comment on the impact of the strike on operations. Chevron in 2007 produced about 350,000 barrels of oil a day from its 32 fields in Nigeria, according to the company's Web site.
Jonathan Omare, secretary of the local Chevron union, said a full-scale strike had begun, though production was not yet affected. ``The strike is everywhere,'' Omare said by telephone. `Nobody's working apart from the guys in the field.''
Saudi Increase
Saudi Arabia first pledged to increase production by 200,000 barrels a day after a meeting between King Abdullah and United Nations Secretary-General Ban Ki-Moon that was reported on June 16. The kingdom will offer more oil if there is demand and also plans to increase its production capacity to 12.5 million barrels a day by the end of next year, al-Naimi said yesterday.
``People were expecting an increase of about this size, so it's a minor element in the market today,'' Lynch said. ``There would have had to be an increase of 1 million barrels to have a major impact.''
Saudi Arabia may need to sell its oil cheaply to complete deliveries after proposing its production increase, the London- based Centre for Global Energy Studies said in a monthly report today.
Brent crude oil for August settlement rose $1.54, or 1.1 percent, to $136.40 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.
1 comment:
Oil stocks still look great long term.
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