Crude-oil prices rise on Nigeria unrest
MAY. 10 2:17 P.M. ET Crude futures jumped above $71 a barrel Wednesday after the fatal shooting of an American oil worker in Nigeria and a refinery snag in Texas exacerbated supply concerns.
The rally came in spite of U.S. government data released Wednesday that showed an increase in oil and gasoline supplies, highlighting just how nervous the market remains about everything from geopolitics to the weather.
At about $70 a barrel, oil futures prices have been supported for weeks by concerns ranging from the West's diplomatic confrontation with Iran, a thin supply cushion and the upcoming hurricane season, among other factors.
"The market is so jittery right now," said BNP Paribas Commodity Futures broker Tom Bentz.
Light, sweet crude for June delivery rose $1.21 to $71.90 a barrel on the New York Mercantile Exchange, where gasoline futures rose more than 8 cents to $2.13 a gallon.
"Anybody who is going to sell gasoline has to hope that the Middle East stays quiet, that there's no major storms (in the Gulf of Mexico) this summer and that the country's aging refinery infrastructure holds up," said Mike Fitzpatrick, a broker at Fimat USA in New York. "There's a lot more involved in prices than just supply and demand."
With global demand strong and the supply cushion thin, traders also remain worried about output losses in Nigeria, Iraq and the Gulf of Mexico, which was pummeled by hurricanes last summer.
Police in Port Harcourt, Nigeria said a gunman riding a motorcycle shot to death a man working in Nigeria for the Houston-based drilling services company Baker Hughes Inc. The victim was riding in a car to his Port Harcourt office when he was shot, police said.
On Tuesday, a new militant movement whose attacks on oil installations have cut more than 20 percent of Nigeria's of 2.5 million daily barrel production said Tuesday it would target oil workers with fresh attacks. It was not clear if Wednesday's killing was linked to the threat from the Movement for the Emancipation of the Niger Delta.
The market also reacted to word from Valero Energy Corp. that its 50,000 barrel per day refinery in Texas City, Texas, would be undergoing repairs for the next several days.
In its weekly petroleum report, the Energy Department said crude-oil inventories rose last week by 300,000 barrels to 347 million barrels, or roughly 5 percent above year ago levels. Gasoline inventories climbed by 2.4 million barrels to 205.1 million barrels, or almost 4 percent below last year.
The report showed refinery capacity utilization climbed last week by 1.4 percent to 90.2 percent. Gasoline demand over the past four weeks averaged 9.14 million barrels per day, slightly lower than the same period a year ago.
Many analysts have attributed the sluggish consumption to rising prices, while other suggest the data are misleading given the phaseout of a gasoline additive and the increase of ethanol in the country's fuel mix.
Tom Kloza, publisher of the Oil Price Information Service in Wall, N.J., said both groups of analysts are right.
"These are not statistics that have great clarity now," he said. "And uncertainty tends to manifest itself as higher prices."
The Energy Department said Tuesday that U.S. oil demand in the second quarter will likely grow by just 1 percent, or 200,000 barrels a day, to 20.63 million barrels a day, partly due to high gasoline prices. Still, with little evidence of a significant increase in global supplies, "crude oil prices will remain high through 2007," the agency said.
The agency also forecast an average U.S. retail gasoline price of $2.71 a gallon, an increase of 9 cents a gallon from its April forecast. Last summer, pump prices averaged $2.37 a gallon.
At the moment, retail gasoline prices average $2.91 a gallon nationwide, up 72 cents from last year.
Iran's hard-line president on Wednesday dismissed Western concerns over its nuclear program as "a big lie," even as other voices in the regime appeared to suggest that international cooperation was possible.
The comments by Iranian President Mahmoud Ahmadinejad came a day after key U.N. Security Council members agreed to present Tehran with a choice of incentives -- including energy security and civilian nuclear power -- or sanctions in deciding whether to suspend its uranium enrichment program. The move delays a U.S.-backed draft U.N. resolution that could lead to sanctions, or even possible military action, if Iran does not suspend enrichment.
The rally came in spite of U.S. government data released Wednesday that showed an increase in oil and gasoline supplies, highlighting just how nervous the market remains about everything from geopolitics to the weather.
At about $70 a barrel, oil futures prices have been supported for weeks by concerns ranging from the West's diplomatic confrontation with Iran, a thin supply cushion and the upcoming hurricane season, among other factors.
"The market is so jittery right now," said BNP Paribas Commodity Futures broker Tom Bentz.
Light, sweet crude for June delivery rose $1.21 to $71.90 a barrel on the New York Mercantile Exchange, where gasoline futures rose more than 8 cents to $2.13 a gallon.
"Anybody who is going to sell gasoline has to hope that the Middle East stays quiet, that there's no major storms (in the Gulf of Mexico) this summer and that the country's aging refinery infrastructure holds up," said Mike Fitzpatrick, a broker at Fimat USA in New York. "There's a lot more involved in prices than just supply and demand."
With global demand strong and the supply cushion thin, traders also remain worried about output losses in Nigeria, Iraq and the Gulf of Mexico, which was pummeled by hurricanes last summer.
Police in Port Harcourt, Nigeria said a gunman riding a motorcycle shot to death a man working in Nigeria for the Houston-based drilling services company Baker Hughes Inc. The victim was riding in a car to his Port Harcourt office when he was shot, police said.
On Tuesday, a new militant movement whose attacks on oil installations have cut more than 20 percent of Nigeria's of 2.5 million daily barrel production said Tuesday it would target oil workers with fresh attacks. It was not clear if Wednesday's killing was linked to the threat from the Movement for the Emancipation of the Niger Delta.
The market also reacted to word from Valero Energy Corp. that its 50,000 barrel per day refinery in Texas City, Texas, would be undergoing repairs for the next several days.
In its weekly petroleum report, the Energy Department said crude-oil inventories rose last week by 300,000 barrels to 347 million barrels, or roughly 5 percent above year ago levels. Gasoline inventories climbed by 2.4 million barrels to 205.1 million barrels, or almost 4 percent below last year.
The report showed refinery capacity utilization climbed last week by 1.4 percent to 90.2 percent. Gasoline demand over the past four weeks averaged 9.14 million barrels per day, slightly lower than the same period a year ago.
Many analysts have attributed the sluggish consumption to rising prices, while other suggest the data are misleading given the phaseout of a gasoline additive and the increase of ethanol in the country's fuel mix.
Tom Kloza, publisher of the Oil Price Information Service in Wall, N.J., said both groups of analysts are right.
"These are not statistics that have great clarity now," he said. "And uncertainty tends to manifest itself as higher prices."
The Energy Department said Tuesday that U.S. oil demand in the second quarter will likely grow by just 1 percent, or 200,000 barrels a day, to 20.63 million barrels a day, partly due to high gasoline prices. Still, with little evidence of a significant increase in global supplies, "crude oil prices will remain high through 2007," the agency said.
The agency also forecast an average U.S. retail gasoline price of $2.71 a gallon, an increase of 9 cents a gallon from its April forecast. Last summer, pump prices averaged $2.37 a gallon.
At the moment, retail gasoline prices average $2.91 a gallon nationwide, up 72 cents from last year.
Iran's hard-line president on Wednesday dismissed Western concerns over its nuclear program as "a big lie," even as other voices in the regime appeared to suggest that international cooperation was possible.
The comments by Iranian President Mahmoud Ahmadinejad came a day after key U.N. Security Council members agreed to present Tehran with a choice of incentives -- including energy security and civilian nuclear power -- or sanctions in deciding whether to suspend its uranium enrichment program. The move delays a U.S.-backed draft U.N. resolution that could lead to sanctions, or even possible military action, if Iran does not suspend enrichment.
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