Oil hits 11-month high, $76
Oil hits 11-month high above $76
By Javier Blas, Commodities Correspondent, in London
Published: July 6 2007 11:00 | Last updated: July 6 2007 11:00
Oil prices rose above $76 a barrel on Friday to the highest level in 11 months amid renewed unrest in Nigeria and production cuts by Opec, the oil cartel.
Low US petrol inventories ahead of an anticipated surge in demand during the summer holiday season provided additional support.
Analysts warned that further rises were likely as the Nigerian militant group responsible for most of the attacks on the oil industry called off a one-month truce. Attacks had cut about 25 per cent of Nigeria’s oil output.
Costanza Jacazio of Barclays Capital in London said: “The situation in Nigeria is flaring up again.” The kidnap of a three-year-old British girl in the Nigerian oil city of Port Harcourt exacerbated the tension.
Frederic Lasserre, head of commodities at Société Générale in Paris, said: “In the short term, everything points up for prices.”
Shell, Nigeria’s largest foreign oil producer, said that it would not restart production in a key sector of the delta region for the rest of 2007 as insecurity persisted.
ICE August Brent, seen as the best gauge of the oil market, surged to $76.01 a barrel, just $2.5 a barrel below the record high. It later traded up 78 cents to $75.52 a barrel.
The price increase was accentuated by traders closing bets of a fall in prices ahead of the weekend. The fear of new attacks in Nigeria during the weekend forced the traders to take such action. US oil futures were up 74 cents at $72.55 a barrel.
The Organisation of the Petroleum Exporting Countries, which controls 43 per cent of global oil production, has so far resisted western calls to raise production amid high prices.
Leo Drollas, chief economist at the London-based Centre for Global Energy Studies, said: “Opec appears unwilling to contemplate raising output before its September meeting, a policy stance which will push prices higher.”
Since Opec started to cut its supply at the end of 2006, oil prices have surged by more than $15 a barrel. But oil demand, nevertheless, has been robust thanks to strong global economic growth.
The International Energy Agency, the industrialised countries’ energy watchdog, forecast global 2006 oil demand growth at 1.7m barrels a day, up from 0.8m b/d in 2005.
Copyright The Financial Times Limited 2007
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