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Financial Times: Nigerian polls prompt fears over oil supply disruption

By Chris Flood
Published: April 21 2007 03:00 | Last updated: April 21 2007 03:00

London’s InterContinental Exchange is to launch a contract for Middle Eastern sour crude oil futures to compete with the contract that will trade on the Dubai Mercantile Exchange. The DME intends to start its contract in June, but ICE, which sponsors the Brent sweet crude contract, said it would launch on May 21, pending UK regulatory approval.

Oil prices rose yesterday as traders’ attention turned to Nigeria’s presidential elections this weekend and the possibility of disruptions to supplies from the world’s eighth largest crude exporter.

ICE June Brent rose 39 cents to $66.33 a barrel, down 3.4 per cent this week. Brent came under pressure on reports from Nigeria that Shell had resumed limited production from the 380,000 b/d Forcados field, although the company did not confirm this. However, dealers were concerned that if Nigeria’s presidential elections were tainted by allegations of vote rigging, further violence could affect supplies.

Nymex May West Texas Intermediate contract, expiring yesterday, gained $1.05 at $62.88 a barrel, down 1.2 per cent this week. June WTI added 44 cents at $63.76 yesterday.

US gasoline stocks have fallen for 10 consecutive weeks as supplies tighten ahead of the summer driving season. Nymex May RBOB gasoline rose just under 2 cents to $2.1079 a gallon yesterday but fell 3.3 per cent over the week.

Gold rose 1 per cent to $691.80 a troy ounce this week, supported by dollar weakness and news of progress in Iran’s nuclear programme.

Platinum gained 3.2 per cent at $1,313 a troy ounce, helped by renewed fund interest following plans by Zurich Cantonal Bank and ETF Securities to launch platinum exchange traded funds. Two major platinum producers voiced concerns, fearing the ETFs could cause a price spike and damage jewellery demand.

Base metals displayed resilience despite concerns that China might be forced to raise interest rates tocool rapid economic growth.

Copper rose 3.3 per cent this week to $7,960 a tonne, supported by concerns over supply disruptions at the giant Grasberg copper mine in Indonesia, where workers have threatened to extend their protest for a month if welfare benefit demands are not met.

After hitting a contract record of $15,200 on Wednesday, tin fell 4.3 per cent this week to $13,750 a tonne after the Indonesian government approved export permits for two smelters this year.

Nickel added 5.2 per cent to $48,900 a tonne as available stocks remain critically low at around 2,900 tonnes.

May wheat futures rose 4.9 per cent to $5.02 a bushel in Chicago this week on reports of frost damage to US planting. Global wheat stocks stand at near record lows and concerns are mounting about drought affecting the Australian harvest.

Wet weather has slowed spring corn planting but conditions are expected to improve in the midwest in the next few days. May corn fell 1.5 per cent to $3.63½ a bushel this week.

Copyright The Financial Times Limited 2007

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