Oil hits 11-month high of $75

Oil hits 11-month high of $75
By Javier Blas in London
Copyright The Financial Times Limited 2007
Published: July 6 2007 11:00 | Last updated: July 6 2007 11:00


Oil prices rose on Friday to $75 a barrel for the first time since August on renewed unrest in Nigeria’s delta oil producing region.

Low US petrol inventories and strong summer demand also contributed to the bullish sentiment.

Analysts said further price increases were likely as the Movement for the Emancipation of the Niger Delta, the group thought to be responsible for most of the attacks in the region, called off this week a one-month truce. Attacks by militants had cut about 25 per cent of Nigeria’s oil production.

Shell, Nigeria’s largest foreign oil producer, said recently that it would not re-start its production in a key sector of the delta region for the rest of 2007 as security concerns persist.

A raid on Tuesday on an oil rig operated by Shell, and the kidnap on Thursday of a three-year-old girl in the Nigerian oil city of Port Harcout added to the sense of increasing insecurity in the West African country.

ICE August Brent, the world’s benchmark, hit $75.10 a barrel in early morning trade and was later 28 cents higher at $75.03 a barrel. The price now is less than $5 a barrel below the all-time high of $78.48 a barrel of last summer.

The most heavily trader ICE September Brent contract rose to $75.21 a barrel in morning trade, while Nymex August West Texas Intermediate rose 12 cents to $71.93 a barrel.

The opposition of the Organisation of the Petroleum Exporting Countries to raise its output quotas provided additional support to the market. Opec, the oil cartel, controls about 43 per cent of world’s oil production.

“Opec appears unwilling to contemplate raising output before its September meeting, a policy stance which will push prices higher as refiners around the world begin to compete more vigorously for crude to support higher runs over the coming months,” the Center for Global Energy Studies, a London-based consultancy, warned in a recent report.

US refineries last week increase their utilisation level to 90 per cent and supplied the highest level of petrol since records began in 1982. But analyst said that strong consumption could quickly drain US petrol inventories in spite of the extra supply.

The 4 of July Independence Day traditionally marks the summer peak in US petrol consumption.