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Sun, Jan 17, 2010 - Page 10 News List

Oil prices tumble over demand, Nigeria woes

AFP , NEW YORK

Oil prices tumbled on Friday as investors worried about demand amid a fragile global economic recovery and showed little reaction to renewed unrest in Nigeria’s oil-producing region.

New York’s main futures contract, light sweet crude for delivery next month, dropped US$1.39 to close at US$78 a barrel.

In London, Brent North Sea crude for March delivery dropped US$1.46 to settle at US$77.11.

The New York benchmark contract has fallen for five consecutive sessions since closing at US$82.75 a week ago.

Traders continued to weigh weak energy demand in the US that raised concern about the strength of a fragile recovery in the world’s largest economy, after official data showed unexpected increases in US petroleum reserves.

“The second consecutive weekly build to crude stocks has been disconcerting for investors who were expecting a drop as a consequence of rising heating demand,” Mike Fitzpatrick of MF Global said.

A bearish report on Friday from the International Energy Agency (IEA) also dented sentiment.

The IEA said oil demand this year would be “sluggish” in the developed world, with emerging markets accounting for any increases.

The agency left unchanged a prior forecast of a 1.7 percent rise in global demand this year to 86.3 million barrels per day.

“IEA has left its demand forecast unchanged, and reflects a still constricted global economy, which will be increasingly supplied by rising output room ­non-OPEC producers, showing the cartel’s dwindling ability to influence prices,” Fitzpatrick said.

Meanwhile, geopolitical tensions in Nigeria were drawing attention.

Nigerian gunmen demanded a ransom of 300 million naira (US$1.98 million) for the release of three Britons and a Colombian abducted this week, police said on Friday.

The four — contract workers for the Anglo-Dutch oil giant Shell — were abducted on Tuesday.

This was the first major kidnapping in southern Nigeria since last July in the wake of a ­government amnesty which saw thousands of militants lay down their arms.

Armed groups claiming to seek a fairer share of oil revenue for locals since 2006 have staged attacks on oil installations in the Niger Delta, wreaking havoc with crude output and international oil prices.

An attack on a Chevron pipeline last Friday forced a shutdown of 20,000 barrels a day.

Nigeria’s main rebel armed group, the Movement for the Emancipation of the Niger Delta, said it had approved the attack.

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