Oil prices on the rise again--War woes, Nigeria unrest, shrinking gas stocks add pressure
URLLONDON, March 27 — Oil prices surged back above $30 a barrel on Thursday as signs of a protracted war in Iraq fueled fears of shortages, with Nigerian exports crippled by political unrest. PRICES HAVE RISEN 12 percent this week as a fall in U.S. gasoline stocks — at a time when refiners are normally scrambling to build inventory — fueled fears of tight supplies for summer vacation driving demand. U.S. crude futures added $1.82 to hit $30.45 a barrel in New York, rebounding from a 25 percent drop last week when traders bet heavily on a quick U.S. victory with little disruption to oil flows. “Current oil prices are not fully reflecting the tightness in inventories and the gasoline problem, let alone the current geopolitical context,” said Paul Horsnell of U.S. investment bank J.P. Morgan. “Inventories need to start climbing very sharply to give any chance of avoiding a huge spike in gasoline prices,” he said. Brent crude oil climbed $1.56 to $26.85 per barrel in London. The U.S. army officer in charge of rehabilitating Iraq’s southern oilfields on Thursday warned it would take several months to get the fields pumping again because of suspected booby traps, blazing wellheads and neglect. Military analysts expect the U.S. campaign to occupy Iraq, which ranked as the world’s seventh-largest exporter before the war, to take up to another month. U.S. President George W. Bush and British Prime Minister Tony Blair appealed to the United Nations to resume the oil-for-food program immediately to address humanitarian needs. NIGERIA Bloody clashes between warring tribal factions in Nigeria’s oil-rich Niger Delta have shut down 40 percent of oil output from Africa’s biggest producer. Ethnic leaders have agreed to a cease-fire which should allow foreign multinationals, including Royal Dutch/Shell and ChevronTexaco, to return, but companies said it was still unsafe to do so. Nigerian crudes produce a high yield of gasoline when refined, ideal for U.S. refiners who should be cranking up gasoline output ahead of the peak demand season in summer. The U.S. government released data on Wednesday showing gasoline stocks declined 1 percent last week at a time they should be rising. Unleaded gasoline futures in New York gained 5 percent to 97.20 cents per gallon.
Weather clears, aiding coalition advance on Baghdad U.S. to send 100,000 reinforcements to Iraq U.S. airstrikes wipe out Iraqi convoy near Karbala More than 30 U.S. Marines reported injured in "friendly fire" incident U.S. paratroopers secure airfield in northern Iraq Warplanes bomb Baghdad into morning The OPEC exporting cartel has said it will fill any supply disruption due to Iraq or Nigeria, although the recent price slump has dissuaded it from releasing any extra supply. “There is more oil in the market than it can absorb. This is obvious from the fact that prices have dropped,” OPEC President Abdullah al-Attiyah told reporters on Thursday. Iraqi oil exports ground to a halt as the U.S. launched its offensive. But supplies from other Middle East producers, accounting for 40 percent of world exports, have increased recently and shipping from the Gulf has proceeded normally. Kuwait initially shut a few oil wells near the Iraqi border but was restoring some production on Wednesday. Saudi Arabia, Kuwait, Iran, Qatar and the United Arab Emirates ship about 15 million barrels per day through the Gulf. Fears that Iraq might destroy oilfields in a replay of the massive damage inflicted by retreating Iraqi troops in the 1991 Gulf War have not materialized. More Oil & Energy news • Iraqi oil sales mired in the fog of war • Energy refund ordered for California • El Paso to settle pricing scandal • Gas prices fall over past week • Gas prices rise less than 1 cent