MARKET WATCHCrude prices jump with unrest in Nigeria

Feb. 21, 2006
The New York Mercantile Exchange was closed Feb. 20 for the US Presidents Day holiday, but Bloomberg.Com reported Feb. 21 the biggest crude price jump since Jan. 20.

Sam Fletcher
Senior Writer

HOUSTON, Feb. 21 -- The New York Mercantile Exchange was closed Feb. 20 for the US Presidents Day holiday, but Bloomberg.Com reported Feb. 21 the biggest crude price jump since Jan. 20 to $61.50/bbl in overnight electronic trading because of escalating unrest in Nigeria.

Last week, the head of the Movement for the Emancipation of the Niger Delta declared total war on international oil companies operating in that area. Royal Dutch Shell PLC shut in production of 455,000 b/d following an attack on an export terminal and the kidnapping of nine foreign oil workers. Rebels attacked a pipeline Feb. 20.

"There remains concern that Iranian output could be disrupted if the UN imposes sanctions following a Mar. 6 meeting of the International Atomic Energy Agency," said Robert S. Morris at Banc of America Securities LLC, New York. "Talks with Moscow on Monday with regard to enriching Iranian uranium in Russia ended without a solution, although both sides agreed to continue talks."

Energy markets are considering comments from some members of the Organization of Petroleum Exporting Countries that the group might cut production at its late-March meeting.

Also supporting crude and product prices, Morris said, are "concern looking ahead to the summer driving season over tightness for gasoline with the phaseout of methyl tertiary butyl ether, continued strong demand, and a higher-than-normal refinery maintenance period now beginning."

In London, the April contract for North Sea Brent crude jumped by $1.65 to $61.54/bbl Feb. 20 on the International Petroleum Exchange.

The average price for OPEC's basket of 11 benchmark crudes increased by $1.09 to $55.46/bbl.

Contact Sam Fletcher at [email protected].