LONDON, 1 October 2004 — High-flying oil climbed back over $50 a barrel yesterday, with worries over the security of Nigerian supply supporting prices despite a surprise build in US crude inventories.
US light crude traded as high as $50.10 a barrel, less than 40 cents off Tuesday’s all-time record of $50.47, before falling back to just under $50. London’s Brent crude was 62 cents up at $46.70.
A Nigerian rebel group’s threat to launch all-out war against the government in the oil-rich Delta Region has kept prices boiling this week. Mujahid Dokubo-Asari’s Niger Delta People’s Volunteer Force agreed a truce after talks in capital Abuja on Wednesday, helping the market unravel some of its gains.
Analysts said fears still remained over the security of Nigeria’s more than two million barrels per day of crude. Peace talks continued in Abuja yesterday, but main producer Shell said it had withdrawn more workers from the troubled region.
“The Nigerian cease-fire inspired a classic knee-jerk sell off after the European close last night, but it did not take too long for the still less than conciliatory tone of the rebel leaders to show through,” said 4Cast analyst Paul Bednarczyk.
“Until and unless there is some more tangible progress on talks the crude price is likely to eat still further into the ground lost after the upside surprise on crude stocks from the US agencies yesterday.”
Fears for a disruption to world supply capacity, tightly stretched to accommodate the fastest demand growth in a generation, have underpinned more than 53 percent gains on crude prices so far this year.