- The Washington Times - Tuesday, April 22, 2008

Oil prices rose today to all-time highs above $118 a barrel on concerns over supplies from some key producers.

Light, sweet crude for May delivery rose as high as $118.05 a barrel in electronic trading on the New York Mercantile Exchange, eclipsing yesterday’s all-time high of $117.83.

By the afternoon in Europe, the contract had eased to $117.51, up 3 cents on yesterday’s close of $117.48 a barrel. The May contract expires at the end of trading today.

In London, Brent crude futures added 2 cents to $114.45 a barrel on the ICE Futures exchange, after also setting a new record earlier in the day of $115.05.

A Royal Dutch Shell PLC joint venture in Nigeria said yesterday it may have to cut crude deliveries some 169,000 barrels a day in April and May because militants sabotaged a pipeline last week in the country’s south.

The company, Shell Petroleum Development Co., declared force majeure on its April and May oil delivery contracts from its 400,000-barrel-a-day Bonny fields, effective April 22, a move that protects it from litigation if it fails to deliver on contractual obligations to buyers.

Militancy and lawlessness has grown in recent years in Nigeria’s south, and attacks on oil infrastructure have become common.

“The disruption in Nigeria with Royal Dutch Shell is serious,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

“It is light, sweet crude, which is much desired by the U.S. market during the summer gasoline season, so that certainly has affected the market,” Shum said.

Nigeria is a major supplier to the United States. Attacks there in the past two years have cut nearly a quarter of the African country’s oil output.

Crude oil also rose yesterday after the 150,000-ton tanker Takayama was attacked off the coast of Yemen as it headed for Saudi Arabia.

Kyodo News agency reported that the Japanese tanker was fired on by a rocket launcher from a small boat. None of the ship’s 23 crew members was injured, the company said, but hundreds of gallons of fuel leaked before a 1-inch hole in the tanker’s stern was repaired.

Analysts said comments today by the head of the Organization of Petroleum Exporting Countries about plans to boost oil production target capacity by 5 million barrels a day by 2012 would not have an immediate effect on oil prices.

Speaking at an energy forum in Rome, OPEC Secretary-General Abdalla Salem el-Badri told reporters that issues of supply and demand were being discussed but he did not expect any agreement on whether prices are too high or too low.

“This is not anything new and it will not help ease oil prices,” said Ehsan ul-Haq, head of research at JBC Energy in Vienna, Austria. “The oil futures market is very strong, but the physical markets are not so strong.”

Other supply developments also factored into the market. In Mexico, oil production slipped 7.8 percent in the first quarter to 2.91 million barrels a day as output at the country’s traditional oil fields wanes, state oil company Petroleos Mexicanos said. In Scotland, workers at Ineos PLC’s 196,000 barrel-a-day Grangemouth refinery and petrochemical plant have threatened to strike for 48 hours from April 27 over changes to an employee pension plan.

The weak U.S. dollar has continued to support oil prices, with the greenback again near all-time lows today. In European trading, the euro was worth $1.5926, up from $1.5916 late yesterday in New York.

Commodities such as oil and gold are still attractive hedges to investors seeking hedges against further drops in the currency.

In other Nymex trading, heating oil futures rose 0.01 cent to $3.3115 a gallon while gasoline futures gained 0.53 cent to $2.9844 a gallon. Natural gas futures were down 5.2 cents at $10.681 per 1,000 cubic feet.

Associated Press writer Gillian Wong in Singapore contributed to this report.

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