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Nigeria: Oil Prices Slip, Opec Extraordinary Meeting Likely
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Leadership (Abuja)
1 May 2008
Posted to the web 1 May 2008
Ese Awhotu
Abuja
Crude oil prices yesterday slipped more $US3 a barrel, the slip is described by analysts as the biggest recorded in one month, after BP restarted a North Sea oil pipeline and the dollar strengthened, reducing the appeal of commodities to investors.
Crude oil for June delivery dropped $US3.14, or 2.6 per cent, to $US115.61 a barrel at the 2.30pm close of floor trading on the New York Mercantile Exchange. It was the biggest one-day decline since March 31. Futures surged to a record $US119.93 a barrel yesterday. Prices are 74 per cent higher than a year ago.
Data from the United States Energy Department showed demand for finished petroleum products dropped 8.5 per cent in February from January, and demand for gasoline fell 6.2 per cent. Some of that drop can be attributed to February being a shorter month, but it still suggests high prices are cutting America's appetite for fuel.At the same time, supply concerns in some places are easing. A British refinery strike that caused the shutdown of a 700,000-barrel-a-day pipeline system ended Tuesday. Listing other bullish factors, Vienna's JBC Energy noted "talks are under way to end the six-day strike at an ExxonMobil site in Nigeria and production in the North Sea being ramped up after the recent short-term closures of the Forties Pipeline system.
"According to the Sydney morning herald, in the U.S., the Energy Department's weekly inventory report on Wednesday was also expected to show domestic crude supplies rose, according to survey by Platts, the energy research arm of McGraw-Hill Cos.U.S. crude oil inventories were expected to have risen 1.6 million barrels last week, with crude imports continuing to grow as refiners ramp up production, the Platts survey said.
Analysts projected a decline of 800,000 barrels in gasoline stocks and a 150,000-barrel build in stocks of distillates, which include heating oil and diesel, the survey showed. Refinery utilisation was expected to edge up 0.3 percentage points to 85.9 per cent.The oil market is also expected to keep an eye on other key information releases later this week such as the U.S. Labour Department's payroll report.
Analysts believe that oil which ran from US$65 a year ago to a record near US$120 on Monday has been fueled in large part by the dollar's protracted decline.In other Nymex trading, heating oil futures were nearly flat at US$3.252 a gallon (3.8 liters) while gasoline prices fell more than a penny to US$2.9253 a gallon. Natural gas futures fell by more than 2 cents to US$10.8 per 1,000 cubic feet.Brent crude futures slid 43 cents to US$113 a barrel on the ICE futures exchange in London.
Record oil prices pushed oil-company profits higher. BP, Europe's second-biggest oil company, posted a 63 per cent jump in first-quarter net income to $US7.62 billion. Royal Dutch Shell, Europe's biggest oil producer, said profit rose 25 per cent to $US9.08 billion.
Futures contracts on the Chicago Board of Trade shows an 82 per cent chance the Fed will trim its target for overnight lending between banks by 0.25 percentage point to 2 per cent tomorrow. The European Central Bank has not cut rates because of rising inflation, which has led to the dollar falling against the euro.
Oil has risen 42 per cent and the dollar has dropped 12 per cent against the euro since the Federal Reserve began lowering interest rates on September 18. Gold, corn, soybean s and rice also rose to records this year as the dollar dropped.
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The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, fell 1.9 per cent to 1483.884 today, the lowest since April 8. The index is up 33 per cent from a year ago.
At its extraordinary meeting, OPEC must ease global economic jitters by pricing oil in euro.
ONCE the world will be allowed to know that the past three decades of cheap Arabian oil have been made possible by the flow of cheap gold to the Saudi Arabia oil-central bank THEN most will start to understand what the gold-euro really means.
Reuters reported on Wednesday that Venezuela will not abandon the US dollar as a currency for oil sales, despite the OPEC member’s trend toward asking for payments in euros for certain contracts (1) and that whereas in the past Iranian officials... [Read Full Text]
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