Oil Rises

Crude oil rose on signs that Saudi Arabia's output increase may not raise global supply enough to make up for production disruptions in Nigeria.

Attacks on a Royal Dutch Shell Plc platform and a Chevron Corp. pipeline last week halted 300,000 barrels a day of Nigerian output. Nigeria's white-collar oil union began a strike against Chevron today. Saudi Arabia will pump an extra 200,000 barrels a day next month, Oil Minister Ali al-Naimi said yesterday.

Crude oil for August delivery rose $2.15, or 1.6 percent, to $137.51 a barrel at 1:06 p.m. on the New York Mercantile Exchange. Prices touched a record $139.89 on June 16.

An attack on Shell's Bonga platform, off the coast of Nigeria, on June 19 may halt deliveries for as long as six weeks, the company said last week. The field produces about 190,000 barrels a day. Chevron halted 120,000 barrels a day of onshore production after its pipeline was blown up last week.

After the latest round of attacks, the Movement for the Emancipation of the Niger Delta said it will declare a cease-fire starting tomorrow to ``give peace and dialogue another chance.'' Action against foreign oil companies in Nigeria will end at midnight local time tomorrow, the group said in a statement yesterday.

Nigeria produces low-sulfur, or sweet, oils prized by refiners because of the high proportion of gasoline and distillate fuels it yields. Distillate fuel is a category that includes heating oil and diesel.

Cooper said it's too early to comment on the impact of the strike on operations. Chevron in 2007 produced about 350,000 barrels of oil a day from its 32 fields in Nigeria, according to the company's Web site.

The kingdom will offer more oil if there is demand and also plans to increase its production capacity to 12.5 million barrels a day by the end of next year, al-Naimi said yesterday at a summit in Jeddah. Capacity may eventually rise to 15 million if necessary, using oil from five ``mega'' fields that could potentially start up within three years, al-Naimi said.

Saudi Arabia may have to lower the price of its oil to entice refiners after proposing its production increase, the Centre for Global Energy Studies said in a monthly report today. The London-based consulting group was founded by Sheikh Ahmad Zaki Yamani, who was Saudi Arabia's oil minister from 1962 to 1986.

Brent crude oil for August settlement rose $1.85, or 1.4 percent, to $136.71 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.


TradingEconomics.com, Bloomberg
6/23/2008 11:01:33 AM