Tuesday May 06, 2008

Crude oil hits $120.21 record upon attack on Shell Nigeria facility

This article belongs to the NYMEX crude oil price records story arc.

bloomberg.com :

Crude oil rose above $120 a barrel to a record in New York on concern that production disruptions in Nigeria, Africa's biggest producer, will limit supplies. Crude oil futures for June delivery touched a record $120.21 a barrel in intraday trading. The price has gained 94% in the past year. Oil also climbed as the dollar weakened against the euro and a report showed that US service industries unexpectedly expanded in April, signaling stronger economic growth.

Militant attacks on an oil-transfer facility in the country forced Shell to reduce output, the Associated Press reported May 3 [2008]. The Nigerian Movement for the Emancipation of the Niger Delta, or MEND, claimed responsibility for the weekend assault. MEND "overran a heavily fortified Shell flow station in Bayelsa state and destroyed the facility," the group said in a statement. The strike led to the destruction of three well-heads, MEND said. The group said last month it will attack every oil and gas pipeline in the nation as part of its "Operation Cyclone" campaign.

- And with that, the $120 resistance level for NYMEX crude oil has been broken. The next resistance levels to look forward to are probably going to be around $150, $180 and $200. The $110 level has proven to be credible support, and the next support levels after that remain at $100, $90 and $85.

Shell's oil facilities in Nigeria have always been under some attack or another, but this one, if it is as reported, looks to be more serious than the previous ones so far. Depending on whom you ask, Nigeria accounts for 15% to 20% of Shell's total global crude oil output, so this is quite serious. They had better be able to repair the damaged facilities quickly, or oil prices will be quickly going for the next couple of resistance levels beyond $120.

And don't count on the Saudi's to quickly flood the market in response either, because, as the peakoilers would point out, a. they probably don't have any real spare capacity and b. even if they do have something to spare it's very likely to be Saudi Heavy crude as compared to Nigeria's much more desirable Bonny Light grade.

See also :

1. OPEC chief warns of $200 a barrel oil price as NYMEX crude oil hits $119.93 record
2. Crude oil hits $119.90 record on Euro breakout above 1.60
3. OPEC keeps output steady in face of $100 oil

(2008-05-06 00:21:59 SGT) [Energy] Permalink

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