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The New York Times: Crude Oil Prices Rise to $69 a Barrel

Published: January 23, 2006
Filed at 12:13 a.m. ET
SINGAPORE (AP) — Oil prices rose to open the week above $69 a barrel on supply fears linked to Iran's tense diplomatic standoff with the West over its nuclear ambitions and continuing labor unrest in oil-rich Nigeria.
Light, sweet crude for March delivery rose 57 cents to $69.05 a barrel in electronic trading on the New York Mercantile Exchange. The contract on Friday jumped $1.52 to settle at $68.35 a barrel, the highest closing price since Sept. 1, just days after Hurricane Katrina made landfall.
Crude oil prices are nearing the record high of $70.85 a barrel on Aug. 30.
Nymex February heating oil gained 1.28 cents to $1.8800 a gallon while gasoline rose 1.15 cents to $1.8285 a gallon.
Analysts said market participants were concerned Iran's dispute with the West over the restarting of its nuclear program could lead to supply disruptions in the second-largest oil producer within the Organization of Petroleum Exporting Countries, or OPEC.
Such geopolitical worries, which have driven crude oil prices up at a time when global petroleum demand is high and the emergency supply cushion is thin, have overshadowed rising oil inventories and mild winter weather in the United States — factors that would normally depress prices.
''Participants are making the calculations that these elements (rising inventories and mild weather) must recede in importance as the potential for supply disruption increases, and demand, in the absence of widespread economic contractions, will be high enough to strain the world's capacity to meet it,'' said John Kilduff, an analyst at brokerage Fimat USA, in a note to clients.
Iran exports roughly 2.5 million barrels per day — 1 million barrels more than current excess production capacity worldwide.
After Iran broke U.N. seals at a uranium enrichment plant and said it was resuming nuclear research after a two-year freeze, the Europeans on Jan. 12 declared talks at a dead end and called for Iran's referral to the U.N. Security Council.
The International Atomic Energy Agency's board of governors will meet Feb. 2 to discuss whether to refer Iran to the Security Council.
''The geopolitical drama over Iran and Nigeria is sending oil prices upwards,'' said energy analyst Victor Shum of Purvin & Gertz in Singapore. ''But Nigeria is more problematic in the short term, because it has actually disrupted supply.''
In Nigeria, militants holding four foreign hostages claimed Sunday they would release the captives soon, according to a statement purportedly from the militant group.
The hostages — an American, a Briton, a Bulgarian and a Honduran — were seized near a Shell oil field on Jan. 11 by a group that also claimed responsibility for other oil industry attacks that have cut Nigerian production by almost 10 percent.
Natural gas fell 2.67 cents to $9.085 per 1,000 cubic feet.

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