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Oil Touches a New Record on Supply Worries
LONDON
(April 21/06) – The price of oil touched a new record above $73 a
barrel Friday amid concern about Iran’s nuclear ambitions and declining
U.S. gasoline stocks, but then fell back as traders took profits.
Analysts
say oil prices are likely to climb higher in the weeks ahead as worries
grow about how international pressure on Iran, OPEC’s No. 2 oil
producer, will affect its crude output. Rebel disruptions of oil
production in Nigeria also pose a risk to world supplies.
Traders
also worried about the possibility of inadequate gasoline supply in the
summer, after weekly U.S. government data showed a drop in domestic
gasoline stocks.
“I’m inclined to think it’s not reached a peak
yet,” said Tobin Gorey, commodity strategist at the Commonwealth Bank
of Australia in Sydney. “We’re still faced with a tight supply-demand
equation against the backdrop of strong economic growth, and there’s
still more money to come into the market.”
Light, sweet crude for
June delivery opened in electronic trading Friday at a high of $73.50 a
barrel setting a new intraday record for a front-month contract on the
New York Mercantile Exchange. The June contract had been trading at
these levels, even reaching as high as $74.50 a barrel on Thursday, but
Friday was the first day it traded as the front-month contract since
the May contract expired Thursday.
However, the price fell 39 cents to $73.30 a barrel by midday in Europe.
Brent crude for June fell 66 cents to $72.52 a barrel on London’s ICE Futures exchange.
Gasoline
futures fell nearly 3 cents to $2.1870 a gallon while heating oil
prices lost more than 2 cents to $2.0335 a gallon. Natural gas slipped
11 cents to $7.945 per 1,000 cubic feet.”The pullback appears to be due
to profit-taking, which is not surprising considering prices have
really surged”in the past few days,” said Vkctor Shum, energy analyst
with Purvin & Gertz in Singapore. “The decline will not be large
because the Iranian issue is keeping a high floor under prices.”On
Thursday, Hugo Chavez, president of Venezuela, one of the world’s top
oil producers, said oil prices would reach $100 a barrel should concern
over Iran’s nuclear weapons capability lead the United States to invade
the Middle Eastern nation.”Traders are not relenting on their worries
of Iran,” Gorey said, adding the Iranian threat was responsible for
adding at least $15 per barrel to the oil price.The United States and
Britain say that if Iran does not comply with the Security Council’s
April 28 deadline to stop uranium enrichment, they wilh seek a
resolution that would make the demand compulsory. Iran has consistently
resisted calls to abandon its enrichment program.Also, in Nigeria, the
fifth-biggest source of U.S. oil imports, militants exploded a car bomb
inside a military base late Wednesday, in their first major attack
since February. This year, the group has cut more than 20 percent of
Nigeria’s daily oil exports of 2.5 million barrels.A spokesman for
Shell Petroleum Development Co. in Nigeria said Friday that security
concerns in the region were preventing the restart of up to a fifth of
its oil output and that the company was not in a hurry to start up
production.Royal Dutch Shell PLC’s announcement Thursday that its Mars
platform will resume normal production by late June offered some ralief
to the markets. It is the largest oil platform in the Gulf of Mexico
damaged by Hurricane Katrina, and accounts for about 5 percent of total
Gulf of Mexico oil and natural gas production.
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