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Oil Trades Above $116 on Nigerian Supply Concern, U.S. Demand


Bloomberg: Oil Trades Above $116 on Nigerian Supply Concern, U.S. Demand 

By Gavin Evans

May 5 (Bloomberg) — Crude oil was little changed above $116 a barrel in New York on speculation rising demand and production disruptions in Nigeria may limit supplies.

Rebel attacks on an oil-transfer facility in Africa’s biggest producer have forced Royal Dutch Shell Plc to reduce output, the Associated Press reported May 3, citing the company. Prices jumped the previous day after Turkish warplanes attacked rebel bases in oil-rich Northern Iraq and a report showed the U.S. economy lost fewer jobs than forecast in April.

“The big picture is more consumption,” said Peter McGuire, managing director of Commodity Warrants Australia Pty in Sydney. North Americans won’t be traveling overseas this year and “will be driving their cars as much as ever,” Maguire said.

Crude oil for June delivery was at $116.44 a barrel, up 12 cents, in after-hours electronic trading on the New York Mercantile Exchange at 2:53 p.m. in Singapore.

The contract rose $3.80, or 3.4 percent, to $116.32 on May 2, the biggest gain in a month, after plunging to a two-week low the day before because a report showed U.S. stockpiles rose a second week and the dollar reached a five-week high against the euro. Oil reached a record $119.93 on April 28 after strikes in the U.K. and Nigeria cut production and processing.

The Movement for the Emancipation of the Niger Delta is considering a temporary cease-fire after an appeal by U.S. Senator and presidential candidateBarack Obama, the militant group said in an e-mailed statement yesterday.

Brent, Dollar

Brent crude oil for June settlement gained 19 cents to $114.75 a barrel on London’s ICE Futures Europe exchange at 2:48 p.m. in Singapore. It rose 3.7 percent on May 2 having touched a record $117.56 on April 25.

New York oil prices gained 90 percent the past year. New records were set the past three months as the falling U.S. dollar led producers to seek higher prices and encouraged investors to buy physical assets as a hedge against inflation.

“We could see the oil market level back” if the U.S. dollar continues to gain, Commodity Warrant’s McGuire said in a interview with Bloomberg television. “We think it will be further down to around the $105-$110 level in the next couple of weeks” before rising again with the summer demand peak in the U.S., he said.

Gasoline demand in the U.S., the world’s largest oil consumer, typically peaks June through August as summer vacations put more cars on the roads.

The average price of a gallon of regular gasoline at U.S. filling stations rose 15 cents to $3.62 on May 2 from two weeks earlier, according to oil-industry analyst Trilby Lundberg‘s survey of 7,000 filling stations nationwide. The price was the highest ever reported in her research.

Payrolls Decline

U.S. payrolls shrank by 20,000 workers in April, the Labor Department reported May 2. Economists surveyed by Bloomberg News had projected a loss of 75,000 jobs.

Oil prices were expected to fall this week according to 14, or 61 percent, of 23 analysts surveyed May 1.

Hedge-fund managers and other large speculators reduced bets on rising oil prices for the first time in four weeks, the U.S. Commodity Futures Trading Commission said May 2.

Net-long positions in New York oil futures, the difference between contracts to buy and sell the commodity, fell 24 percent to 53,311 contracts in the week ended April 29.

To contact the reporter on this story: Gavin Evans in Wellington at[email protected]

Last Updated: May 5, 2008 03:05 EDT and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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