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THE WALL STREET JOURNAL: Oil-News Roundup 20 May 2006

Oil News Roundup

May 20, 2006

Crude-oil futures tumbled again on the New York Mercantile Exchange, settling at $68.53 after an OPEC minister hinted the oil cartel wouldn't cut production any time soon. Here is today's well of news about oil and energy.

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THE PRICE OF FEAR: Geopolitical tensions have added roughly 20%, or about $15 a barrel, to the price of crude oil, OPEC acting secretary general Mohammed Barkindo told an OPEC-International Energy Agency workshop in Oslo. Mr. Barkindo pointed out that there was “absolutely no supply shortage” of oil and that global inventories were at five-year highs. That means there must be some other explanation for oil prices staying stubbornly near $70 a barrel, Mr. Barkindo said. Some analysts suggest that speculation has helped, but clearly the sticky issues surrounding Iran, Iraq, Venezuela, Nigeria and other oil-producing nations have played a big part. Mr. Barkindo warned it is also getting harder to predict demand, making exploration projects riskier.

License for Nigerian Militants: Nigeria auctioned 17 new oil-drilling licenses to companies from China, India, the U.K. and Nigeria — making sure to reserve one for a little-known company called Niger Delta United Ltd., which has ties to militants in the Niger Delta, the Financial Times reports. Militant attacks in Nigeria in recent months have shut down about a fifth of the country's total daily production, putting upward pressure on global crude prices.

Iraq Production: Oil production in Iraq has been steadily increasing, a source of much-needed income for the country's reconstruction, said ambassador James Jeffrey, senior advisor to Secretary of State Condoleezza Rice. In a UPI report, Mr. Jeffrey said oil production has reached more that two million barrels a day and exports have hit 1.6 million barrels a day.

Japan Reserves: Japan is planning to increase national oil reserves by five days to 95 days, according to Kyodo News.

Uproar in Ecuador: Saying state oil firm Petroecuador can't successfully maintain output, Occidental Petroleum Corp. asked an international arbitration court to reinstate the U.S. company on the Ecuadorean field and award it $1 billion, MarketWatch reports.

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