Sun, Nov 05, 2006 - Page 10 News List

Crude jumps after warning of possible attacks in Nigeria


World oil prices jumped on Friday after the US government warned of possible attacks on oil facilities in Nigeria, which is Africa's biggest producer of crude.

Analysts said prices were also boosted by the latest US employment data, which suggested solid demand for energy ahead.

New York's main contract, light sweet crude for delivery in December, surged US$1.26 to close at US$59.14 a barrel.

December Brent North Sea crude traded in London settled at US$59.15, gaining US$1.28 from Thursday.

Both the benchmark contracts had slumped Thursday on fears of slowing US economic growth. But sharp upward revisions to payroll numbers published on Friday helped prices recover.

The main spur came from a warning from the US embassy in Nigeria that a militant Niger Delta group may have completed plans to launch attacks on oil facilities in the restive region.

"Driving prices were concerns about the Nigerian threat reported by the US embassy," energy analyst James Williams of WTRG Economics said.

"This is happening right before a weekend. You typically get a bigger bounce in prices heading into the weekend, as traders fear that over a weekend only bad things can happen," he said.

"The attacks allegedly will be carried out sometime during the first week of November and will include 10 to 20 simultaneous bombings of land-based targets and a series of separate attacks on oil installations in which expatriate workers will be taken hostage," the statement on the embassy's Web site said.

There were no details available as to the specific targets of the attack, it said.

The statement added that the kidnapping on Thursday of a Briton and a US citizen was "a continuation of the violence seen since earlier this year in the Niger Delta region."

The two expatriates, working for Norwegian oil services firm Petroleum Geo-Services (PGS), were kidnapped in southern Bayeslsa State and taken to an unknown location.

"Oil prices were down the most part of the week. There has been some short-covering ahead of the weekend," AG Edwards analyst Bill O'Grady said.

"The troubles in Nigeria helped the rebound," he said.

Alaron Trading analyst Phil Flynn said that crude futures were also lifted by US jobs data "that erased some fears of a hard landing and could mean a bigger demand [for energy] than previously expected."

The US labor market displayed fresh signs of vigor last month as the jobless rate fell to a five-year low despite a weaker-than-expected addition of 92,000 jobs, non-farm payrolls data showed on Friday.

Crude futures have been pressured this week also by doubts over the OPEC cartel's promised production cut of 1.2 million barrels per day.

"Typically good news on the US economy from a consumer standpoint means oil prices go up," Williams said.

"On the other hand as we look forward into 2007, there's going to be more non-OPEC production coming on line. And it looks like OPEC is only being 50 percent effective in its planned cuts," he said.

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