NEWS | Wednesday, 23 April 2008

Oil hits $118 for the first time

Oil prices have touched fresh highs as traders bet that violence in key producing nations would hurt supply.
US light, sweet crude rose 57 cents to cross $118 a barrel, before dropping back to $117.77, while Brent crude peaked at $115 a barrel.
The rises were supported by fears of further attacks on pipelines in Nigeria and oil cartel Opec’s refusal to raise quotas to curb rising prices.
Comments that it will raise production in 2012 failed to dampen sentiment.
“Again there are some concerns over supply disruptions in Nigeria,” said David Moore, commodities strategist at Commonwealth Bank of America.
Attacks on Royal Dutch Shell’s pipelines there last week lead to a drop in production of about 169,000 barrels per day for shipments in April and May.
As a result, the company said it would be unable to honour its contractual obligations at the Bonny terminal in Nigeria’s Delta region for these two months.
Anti-government attacks on the region’s oil infrastructure have been escalating for the past few years.
The continued oil rally was supported by Opec secretary general Abdalla Salem el-Badri’s stance that real demand was being well matched by current supply with no immediate need to lift production levels before 2012.
Then, the producers’ group would boost capacity by five million barrels a day.
He said he did not expect to discuss whether prices were too high or too low at an energy forum in Rome attended by government ministers and oil firm bosses.
“The oil futures market is very strong, but the physical markets are not so strong,” said Ehsan ul-Haq, head of research at consultancy JBC Energy.