Bloomberg: Oil Rises on Cut in Eni Nigeria Deliveries, U.S. Heating Demand

By Eduard Gismatullin

Nov. 24 (Bloomberg) — Oil rose after a report that Eni SpA halted delivery of some Nigerian crude because of a militant attack and because traders said heating fuel demand will increase in the U.S.

Rome-based Eni declared force majeure at the Okono/Okpoho offshore oilfield, Dow Jones Newswires reported, without saying where it got the information. Heating fuel demand may rise next week in the U.S., according to analysts surveyed by Bloomberg News.

“Brent oil seems the leader on the back of the news” from Nigeria, said Kevin Blemkin, a broker with Man Group Plc in London. Less output from Eni “added upside potential, and Brent can reach $60.25” a barrel, he said.

Brent crude oil for January delivery rose as much as 65 cents, or 1.1 percent, to $60 a barrel on London’s ICE Futures Exchange. The contract traded at $59.92 a barrel at 11:49 a.m. in London. West Texas Intermediate crude advanced 49 cents to $59.73 a barrel on the New York Mercantile Exchange.

Eni said it halted 60,000 barrels a day, Dow Jones reported. Declaring force majeure protects a company from liability if it is not able to meet contracts due to factors beyond its control.

Attacks by the Movement for the Emancipation of the Niger Delta shut down as much as 631,000 barrels a day of Royal Dutch Shell Plc’s venture earlier this year. Nigeria is Africa’s largest oil supplier.

Crude oil may rise next week on speculation increased demand for heating fuel during the U.S. winter will cut inventories, according to a Bloomberg News survey.

Seventeen of 35 analysts, traders and brokers, or 49 percent, said prices will gain. Eight expect a decline and 10 forecast little change. Last week, 52 percent said oil would be higher this week.

U.S. Dollar Drop

The U.S. dollar fell to a 19-month low against the euro as the premium on U.S. government bond yields over those in Europe shrank to the lowest in 17 months, attracting investors to assets in the euro region. The U.S. currency yesterday dropped to a five- month low against the euro as German business confidence unexpectedly climbed to a 15-year high.

The U.S. currency dropped 1.31 cents, or 1 percent, to $1.3083 per euro as of 11:36 a.m. in London compared with $1.2945 late yesterday.

“ The dollar drop has an impact on the OPEC oil price,” which is set in U.S. dollars, making it cheaper in other currencies, said Veronica Smart, an analyst at the Energy Information Centre, a consulting company in Newmarket, England. “OPEC is looking into global markets, and how the dollar reacts will be incorporated in OPEC’s decision in December.”

OPEC Vigilance

The Organization of Petroleum Exporting Countries, which produces about 40 percent of the world’s oil, will discuss supplies at a Dec. 14 meeting in Abuja, Nigeria. The group last month agreed to reduce production by 1.2 million barrels a day starting Nov. 1 in an attempt to end a three-month price slide.

The OPEC crude oil basket price fell 28 cents to $54.98 a barrel yesterday, the group said in an e-mail. The price is a weighted average of 11 crude blends produced by OPEC nations.

Crude was down earlier today because some traders speculated that a milder-than-usual U.S. winter will crimp heating demand and increase crude inventories.

Temperatures in the U.S. Northeast, the nation’s biggest consumer of heating oil, may be above average in the five days starting Nov. 29, the National Weather Service said yesterday. U.S. crude oil stockpiles jumped 1.5 percent last week, the biggest gain since March, as demand from refiners fell, according to the U.S. Energy Department.

There is “significant build up of crude oil stockpiles in the U.S. and the market does really feel happy in the range of $58 to $59” a barrel, Smart said. “The bearish effect comes from forecasts of milder winter and lower demand.”

U.S. crude oil stockpiles jumped to 341.1 million barrels last week, the highest since June, the Department of Energy said this week. Distillate fuel inventories, including heating oil and diesel, slipped 1.2 million barrels to 133.8 million last week. It was the seventh consecutive decline and left supplies 4.2 percent above the five-year average for the period, the department said.

To contact the reporter on this story: Eduard Gismatullin in London at [email protected]

Last Updated: November 24, 2006 06:57 EST

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