The Hindu : Business : Oil prices hit new record

Online edition of India's National Newspaper
Wednesday, Apr 19, 2006

Business

Business

Oil prices hit new record

Concern over Iran, Nigeria developments

LONDON: Oil prices reached a new high of $70.88 a barrel on Tuesday as persistent concerns about Iran's nuclear programme and supply disruptions in Nigeria overshadowed a new report from OPEC forecasting weakening global demand.

``We have broken new ground today,'' said Victor Shum, energy analyst with Purvin & Gertz in Singapore. ``The market sentiment is bullish, with yesterday's record closing, momentum has been built up to cause a wave of buying.''

Previous high

Light, sweet crude for May delivery on the New York Mercantile Exchange surpassed the previous intraday record of $70.85 a barrel in European electronic trading before easing back to $70.75. That was still 35 cents higher than on Monday, when the contract settled at a record closing price of $70.40 a barrel. The previous intraday high was set on August 30, shortly after Hurricane Katrina lashed at the U.S. Gulf Coast and wreaked havoc on the region's oil industry.

In its latest monthly report, the Organisation of Petroleum Exporting Countries on Tuesday revised its demand-growth forecast for 2006 to 1.42 million barrels a day, down from 1.46 million barrels per day in the previous report. The cartel estimates that global crude-oil demand will be slightly above 84.5 million barrels per day .

OPEC expressed particular concern about the impact rising interest rates would have on consumer spending in the U.S., where gasoline demand grew at a slower rate in the first quarter and could ``carry over into the second half of the year.''

Analysts said oil prices were likely to climb further as long as geopolitical risks in Iran and Nigeria posed threats to supply.

Rising demand

Crude oil production is only barely keeping up with rising global demand, leaving a slim margin for error if there is a prolonged supply interruption, experts say.

Traders are anxious that U.S.-led efforts to stop Iran, OPEC's second-largest member, from pursuing a suspected nuclear weapons programme would lead to a disruption in Persian Gulf supplies. And in Nigeria, militant attacks have led to the shutdown of crude oil production. Platts estimates Nigeria's output fell by 220,000 barrels per day in March, compared with February. — AP

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