Stuff (New Zealand): Oil edges near $US66 on supply worries: “Protesters in major exporter Nigeria ended a week-long siege of oil facilities on Monday, to pave the way for talks with Royal Dutch Shell over compensation for an oil spill and fire in 2003.”: Wednesday 24 August 2005
LONDON: Oil prices inched towards $66 yesterday as global supply disruptions, both real and anticipated, stoked crude's rally and signalled increased volatility.
US light crude was 10 cents higher at $65.75 a barrel by 1012 GMT. London Brent crude rose 9 cents to $64.59 a barrel.
A series of supply outages has overshadowed comfortable crude stock levels in the United States, the world's largest oil consumer, and pushed crude back towards an all-time high of $67.10 hit earlier this month.
"Overall, energy prices remain extremely sensitive to any sort of supply disruption," said a report from Refco.
"We expect crude to trade a volatile range in the mid-$60s until more demand data become available." Last week's supply disruptions are clearing up but oil traders remain on the lookout for further trouble.
Production in Ecuador was recovering but remained around two-thirds of its 530,000 barrels per day (bpd) level late on Monday, as the government and oil companies came close to a deal with protesters who crippled output.
Protesters in major exporter Nigeria ended a week-long siege of oil facilities on Monday, to pave the way for talks with Royal Dutch Shell RDSb.L over compensation for an oil spill and fire in 2003.
Such protests underlined fears over global supply security and refining constraints that have helped keep US oil at an average of $53.79 this year versus $41.47 in 2004.
Dealers were also relieved to see Iraq's southern oil exports of some 1.5 million bpd restart on Monday after being stopped for 12 hours by a power cut.
With some crude production in the UK North Sea and India also offline, dealers worry that Opec - already pumping nearly flat out - will strain to make up any unexpected outages.
"In the past, the impact from these worries would have been dismissed by reassuring noises from Riyadh or Vienna, along with some increased crude volumes to reassure the market," said Rick Mueller of Boston-based Energy Securities Analysis Inc.
"That safety valve no longer exists."
STORM SEASON
Tropical storm Jose, the 10th of an unusually heavy Atlantic hurricane season, neared land in Mexico and reminded traders that the peak September storm period is yet to come and could cause further output disruption in the Gulf of Mexico.
On the downside, analysts polled by Reuters expected US crude oil inventories to have edged up 200,000 bpd last week in government data due on Wednesday.
Worries that higher oil prices could eat into economic growth and the looming end of the peak driving season in the United States could also cause a downturn in market sentiment.
Gasoline stocks in the world's largest consumer are still expected to fall 0.9 million barrels on strong demand.
US heating oil stocks are forecast to have risen for the 14th week as refiners take advantage of hefty margins and look ahead to peak fuel demand in the northern hemisphere's winter.
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