Sun, Oct 29, 2006 - Page 10 News List

Oil prices firm on news of terrorist threat in the Gulf


World crude prices firmed on Friday after news of a potential terrorist threat to energy installations in the Gulf and specifically in Saudi Arabia, the world's biggest oil producer.

New York's main contract, light sweet crude for delivery in December, rose US$0.39 to close at US$60.75 a barrel.

In London, Brent North Sea crude for December delivery added US$0.31 cents to settle at US$61.08 a barrel.

Western naval forces said they feared possible attacks on oil installations in the Gulf, and Saudi Arabia said its facilities were a "high-probability potential target," but that tight security measures were in place.

"All of us immediately looked up when we heard the news, but we also got reassuring news from the navy [coalition] that at least they are covering the water approaches," Societe General analyst Deborah White said.

"The biggest danger is at sea, because you can come from so many different directions and you can have a relatively small boat that could be carrying a relatively large bomb," she said.

"But if in fact they have taken the normal attack-at-sea precautions then they are probably safe, which is why it was only a momentary blip" in oil prices, White added.

Saudi Arabia pumps more than 9 million barrels of oil per day and sits on a quarter of global oil reserves.

Saudi interior ministry spokesman General Mansur al-Turki said threats to his country's oil facilities by terrorist groups were ongoing.

"There are preventive measures in any installation, be it Ras Tannura or others, to prevent any terrorist operation," he said.

Crude futures had traded in negative territory for much of Friday as worries over output eased in major oil producers Norway and Nigeria.

Both New York and London Brent contracts closed down more than a dollar on Thursday due to profit-taking.

That came after crude prices had jumped more than two dollars on Wednesday owing to renewed supply concerns as US heating stocks fell ahead of the northern hemisphere winter.

The fall in US inventories suggested to some traders that the 11-nation OPEC cartel was going through on a promise a week ago to reduce output by 1.2 million barrels a day.

OPEC is battling to support crude prices, which stand about 25 percent lower than record highs above US$78 reached in July and August.

In Norway, meanwhile, state energy giant Statoil resumed production at its Snorre A platform in the North Sea after a two-week halt caused by safety problems.

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