Oil prices rise above US$125 (Dh459) a barrel after militants in Nigeria sabotaged two oil pipelines.
Nigeria pipeline attacks cut crude production
SINGAPORE // Oil prices rose above US$125 (Dh459) a barrel today on supply concerns sparked by the sabotage of two oil pipelines by militants in Nigeria. Light, sweet crude for September delivery added 33 cents to US$125.06 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract rose US$1.47 to settle at US$124.73 a barrel yesterday. In London, September Brent crude gained 34 cents to US$126.18 a barrel on the ICE Futures exchange. Yesterday's attack in Nigeria targeted two pipelines believed to be owned by a unit of Royal Dutch Shell PLC and was the latest in a two-year campaign of attacks on the country's oil industry.
Shell said a pipeline had been damaged in attacks and that some crude production had been shut down to prevent the oil from spilling into the environment. It gave no details. "The militant attacks on Shell's pipelines are certainly supportive of oil pricing," said Victor Shum, an energy analyst with consulting firm Purvin & Gertz in Singapore. "Shell has not divulged the extent of the disruption so it's unclear how serious the pipeline attack is and so the market is really only reacting modestly." "These attacks have of course happened in the past and caused temporary disruptions and so that's what the market expects - it's been factored in," Mr Shum said. The Movement for the Emancipation of the Niger Delta says it is acting to force the Nigerian federal government to send more oil-industry funds to the southern region, which produces all of Nigeria's crude oil but remains impoverished after decades of corrupt and wasteful governance.
Mr Shum said the militant attacks in Nigeria are keeping oil prices from slipping further on concerns that high fuel prices have hurt demand in the US - the world's largest energy consumer - amid increasing uncertainty over the global economy. "The real impact of these reported militant attacks in Nigeria ... simply prevent oil pricing from being weighed down too much over slackening oil demand in the US," he said. "Pricing in the near term looks quite stable around the US$125 level." Crude futures have sharply fallen over the past two weeks. The price of oil has dropped in seven of the last 10 sessions, and is down about 15 per cent from its peak above US$147 a barrel earlier this month. Prices remain about 65 per cent higher than at this time last year. In other Nymex trading, heating oil futures rose 1.51 cents to US$3.5771 a gallon (3.8 litres) while gasoline prices added 1.65 cents to US$3.0865 a gallon. Natural gas futures added 6.3 cents to US$9.226 per 1,000 cubic feet.