LONDON, 13 October 2004 — World oil prices stormed above $54 for the first time yesterday as strikes in Nigeria and Norway raised worries about possible supply shortages during the northern hemisphere winter.
But they later retreated on profit taking, traders said.
The price of reference light sweet crude for delivery in November rose to as high as $54.45 a barrel in electronic trading on the New York Mercantile Exchange, the highest in the contract’s 21-year history.
US crude futures stood at $53.40 in early deals, a fall of 24 cents from Monday’s close.
In London, Brent North Sea crude oil for November delivery soared to a record $51.50 a barrel in early trading, smashing through $51 for the first time in the contract’s 16-year history. Brent futures eased back to $50.44 in late deals, a fall of 22 cents.
Traders were nervous ahead of US petroleum inventory data, to be released today, following recent supply problems in the Gulf of Mexico caused by Hurricane Ivan which continue to affect output.
With demand in China and the United States racing ahead, markets are jittery about any potential disruptions to supplies, particularly light sweet crude, of which Nigeria is a major producer.
Nigerian unions began a four-day general strike on Monday in protest at rising fuel prices, launching their latest challenge to President Olusegun Obasanjo and his program of economic reforms.
Nigeria is Africa’s largest oil producer, with exports of around 2.5 million barrels per day (bpd), though the country’s three biggest producers said there were no reports of disruption to production.
Elsewhere in the African country yesterday, a pipeline carrying crude oil across the Niger delta to Nigeria’s main export terminal burst into flames, the Anglo-Dutch oil giant Shell said, warning production would be cut during repairs.
In Norway, the world’s third biggest exporter of crude, strike action by some 200 offshore workers that has lasted since the beginning of July was reported to have cut Norway’s production by 55,000 bpd, or two percent.
Meanwhile, the Paris-based International Energy Agency lifted its forecast for global oil demand in 2004 but pared its estimate for next year.
In its monthly oil market report for October, the organization raised its global oil demand forecast for this year to 82.4 million barrels per day from 82.16 million bpd previously due to stronger-than-expected demand from Asia.
But next year it sees global oil demand growth slowing sharply to 1.45 million bpd, or 1.8 percent, from 2.71 million, or 3.4 percent, this year.
Ng Weng Hong, editor of industry publication EnergyAsia.com, said the $55 barrier could be broken in New York sooner than he had expected.
“I thought $55 would come in the next three months, but now it looks like we’re short of just one dollar,” he said in Singapore.
“Watch out for a bad winter, we’re going to have a serious situation.”
World oil prices have more than doubled from about $20 a barrel in New York at the start of 2002, surging by about 65 percent since the start of this year.