Crude oil gets close to $121 mark
Crude oil was little changed after reaching a record near $121 a barrel amid supply risks in Nigeria and Iran and signs of stronger US demand.
Royal Dutch Shell Plc said that a rebel attack over the weekend damaged a flow-station in Nigeria, where violence has curbed exports from Africa's biggest oil producer. Supply shortfalls will probably send oil to between $150 and $200 a barrel within two years, Goldman Sachs Group Inc said in a report.
"It's a little bit of Nigeria, a little bit of Iran, and a little bit of the impact from the Goldman Sachs outlook," said Gerrit Zambo, an oil trader at BayernLB in Munich. "People are seeing better numbers on the US economic picture."
Crude oil for June delivery rose as much as 96 cents to $120.93 a barrel on the New York Mercantile Exchange, the highest intraday price since trading began in 1983. The contract traded at $119.72 a barrel in London at 11:44 am local time. On Monday, futures rallied 3.1 percent, reaching an all-time high closing price of $119.97.
Oil prices may rise to between $150 and $200 a barrel within two years because of a lack of adequate supply growth, Goldman Sachs analysts led by Arjun N. Murti said in a report.
Brent crude oil for June settlement also rose to a record, gaining as much as $1.08, or 0.9 percent, to $119.07 and trading at $117.97 at 11:45 am London time. On Monday, Brent rose to a record close of $117.99 on London's ICE Futures Europe exchange.
Iran, the second-largest producer in the Organization of Petroleum Exporting Countries, said it would reject any incentives from Western governments that would block its pursuit of nuclear technology, Reuters news agency reported.
A May 2 attack on the Diebu Creek flow station in Nigeria's Bayelsa state halted some oil output, Shell spokeswoman Caroline Wittgen said, without specifying how much.
Exports cut
The Movement for the Emancipation of the Niger Delta, or MEND, which claimed responsibility for the assault, has forced the company to cut exports of Bonny Light crude by at least 170,000 barrels a day.
Exxon Mobil Corp's Nigeria unit will probably return to its normal rate of oil production of about 860,000 barrels a day by the middle of the week following the settlement of a strike last week, a government spokesman said.
"There is bad news coming out every day on the supply side," said Jonathan Kornafel, the director for Asia at Hudson Capital Energy in Singapore. "It's a scary picture right now," he said, adding that the US will begin its summer driving season within a few weeks.
A report yesterday showed US service industries expanded in April, signaling higher energy use. The Institute for Supply Management said its index of non-manufacturing businesses, which make up almost 90 percent of the economy, grew for the first time since December. Gasoline demand typically climbs going into the summer season when Americans take to the highways for vacations.
Agencies
(China Daily 05/07/2008 page17)