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Bloomberg: Oil Rises to a Record as Dollar Drops; OPEC May Maintain Output

By Nesa Subrahmaniyan and Megumi Yamanaka

Feb. 29 (Bloomberg) — Crude oil climbed to a record for a fourth day as a weakening U.S. dollar and global stock market declines increased the appeal of commodities for investors.

Oil also rose after a crude export pipeline broke in Ecuador because of a mudslide and fire shut a U.K. natural gas terminal, boosting prices for the utility fuel by more than 20 percent. The dollar traded at $1.5181 per euro at 12:07 p.m. in Singapore, after touching $1.5229 yesterday, the weakest since the euro began trading at about $1.17 in January 1999.

“The funds are pushing up prices now. Declines in stock markets and the U.S. dollar make commodities more attractive,” said Zenichi Suda, director of Idemitsu Kosan Co., Japan’s second-biggest refiner. “It’s hardly to do with fundamentals.”

Crude oil for April delivery rose as much as 46 cents, or 0.5 percent, to $103.05 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since trading began in 1983. It eased to $102.80 at 1:47 p.m. in Singapore. Yesterday, futures gained 3 percent to $102.59 a barrel, a record close.

OPEC may decide to maintain supply at a meeting March 5, ignoring a U.S. call for more production, Venezuelan and Libyan officials said yesterday.

Brent crude for April settlement rose as much as 37 cents, or 0.4 percent, to $101.27 a barrel, matching its record high yesterday, on London’s ICE Futures Europe exchange, and traded at $100.97 at 1:31 p.m. Singapore time. It yesterday jumped $2.63, or 2.7 percent, to $100.90 a barrel.

No Force Majeure

PetroEcuador, the state-owned oil company, won’t declare force majeure “for now” after one of its two main pipelines was broken by a mudslide triggered by heavy rain in the eastern Andes, spokesman Miguel Vasquez said in a phone interview. The company is studying the use of an alternative pipeline, he said.

The slide at 3:35 p.m. local time yesterday broke the SOTE pipeline and an adjacent pipeline that takes gasoline to Quito from Ecuador’s oil-producing region, the company said in an e- mailed statement.

The 503-kilometer SOTE pipeline runs from the Amazon region to the port of Balao on the Pacific coast. It transported an average of 342,066 barrels of oil a day this month, according to the SOTE Web site.

Eni SpA said there was a “small” disruption to its Brass River crude-oil production in Nigeria, denying there was a militant attack that cut output. Four traders of West African crude oil said yesterday that output was cut following an attack. Production was reduced by 50,000 barrels a day to around 120,000 barrels a day, one of the traders said.

An Eni spokeswoman said production has been restored.

Gas Prices

U.K. natural gas prices are likely to rise after an explosion and fire yesterday damaged Royal Dutch Shell Plc’s Bacton terminal in England, which handles supplies flowing from the North Sea into Europe’s biggest gas-consuming country.

British natural gas jumped more than 20 percent in after- hours trading following the blaze in a water-treatment plant at the terminal, which was doused by firefighters. The facility on the U.K.’s east coast sustained “structural damage” from the blast, according to a recorded message from the local fire service, which wasn’t more specific.

The Organization of Petroleum Exporting Countries is concerned prices will fall during the second quarter, when consumption usually declines in the Northern Hemisphere.

The group is scheduled to meet in Vienna on March 5 to discuss output. OPEC produces more than 40 percent of the world’s oil.

No More Barrels

“We believe there is no reason at all for us to place more barrels in the market,” Venezuela’s Energy and Oil Minister Rafael Ramirez said yesterday on state television. “At OPEC we’ll maintain production or cut production.”

Shokri Ghanem, chairman of Libya’s National Oil Corp. and the country’s top oil official said yesterday from Tripoli he expects OPEC to leave output unchanged.

The U.S., the world’s biggest oil consumer, wants the group to increase output and help bring down prices, U.S. Energy Secretary Samuel Bodman told reporters yesterday in Washington.

OPEC’s daily shipments of crude will post their biggest decline this year as seasonal demand for winter fuels ebbs, industry consultant Oil Movements said in a forecast yesterday.

The producer-group will load 24.39 million barrels a day in the month to March 16 from 24.82 million barrels a day shipped in the four weeks to Feb. 15, the Halifax, England-based consultant said.

“Oil rising to $103 is not really linked to fundamentals, it’s part of the wave of money going into commodities,” said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. “Nobody expects a production increase from OPEC even in the face of $100-plus oil.”

To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at [email protected] ; Megumi Yamanaka in Tokyo at [email protected]

Last Updated: February 29, 2008 00:55 EST and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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