Print

Mail

wiki links

Oil futures retreat on good news from Nigeria

Crude oil futures fell on Friday as traders took profits after the contract briefly topped US$68 a barrel in the previous session for the first time in more than two months.

Markets also took heart from optimistic comments by an oil company executive about restoring production in Nigeria.

Light, sweet crude for May delivery on the New York Mercantile Exchange lost US$0.55 to settle at US$67.39 a barrel. May Brent at London's ICE Futures exchange fell US$0.55 to close at US$67.29 a barrel.

"What the market has found is that the US$68-level has a rather strong resistance, and so the contract is now retreating slightly on profit taking," energy analyst Victor Shum of Purvin US& Gertz in Singapore said.

Crude oil prices had risen since US government data released this week showed domestic supplies of gasoline shrank by 4.4 million barrels last week to 211.8 million barrels. That has further driven concerns about summer supplies, even though the stockpile was roughly in line with year-ago levels.

The decline in refined products comes as refineries temporarily shut down operations for maintenance. Vienna's PVM Oil Associates said production output was 120,000 barrels a day lower than the week before.

"The drawdown is uncomfortable to some traders but when refineries return after maintenance, I'm sure they'll produce the products to get ready for summer," Shum said. "The threat to US product supply is driving the market but it's not disrupting anything yet."

Nymex May gasoline futures fell US$0.0233 to finish at US$1.9766 a gallon (US$0.5222 per liter), while heating oil fell less than US$0.01 to close at US$1.8826 a gallon. Natural gas futures declined US$0.229 to settle at US$6.743 per 1,000 cubic feet (US$0.2381 per cubic meter).

US crude oil inventories increased by 2.1 million barrels last week to 342.8 million barrels, or almost 8 percent above year-ago levels. But tension between the West and Iran and violence in Nigeria continued to support prices.

In Nigeria, about 27 percent of output has been knocked out by militant attacks in the Niger Delta region. Militants have pledged more attacks to get southerners a bigger cut of the oil revenues held by the federal government. The country usually produces 2.4 million barrels a day.

Oil company and Nigerian officials said on Friday they were optimistic that oil would recover as soon as next week.

Malcolm Brinded, Royal Dutch Shell PLC's executive director of exploration and production, said some 455,000 barrels a day of its joint-venture output in Nigeria remained locked down.

However, "after the meeting the [Nigerian] president held this week, I'm very optimistic we'll be able to go and review the assets in the near future," he said at an oil conference in Paris.

The head of the International Energy Agency said on Friday that he saw no need to release government-held strategic oil stocks, despite high prices.
This story has been viewed 2517 times.