Sam Fletcher
Senior Writer
HOUSTON, Nov. 27 -- The New York Mercantile Exchange was closed Nov. 23-24 for the US Thanksgiving holiday, but oil prices were up in other markets because of renewed militant attacks on crude supplies in Nigeria that disrupted production of 60,000 b/d.
Eni SPA declared force majeure at the Okono-Okpoho offshore oil field. "Nigeria has suffered anywhere between 600,000 to 800,000 b/d loss in production due to the continuous militant attacks that have plagued the oil rich Niger delta," said analysts in the Houston office of Raymond James & Associates Inc. Although crude prices have vacillated in recent weeks, they said, "Continuous geopolitical turmoil provides a support to crude prices near the $60/bbl level."
On Nov. 22, militants kidnapped seven foreign oil workers in a raid on oil facilities operated by Eni subsidiary Nigeria Agip Oil Co. In a rescue by the Nigerian military, a British worker was killed, an Italian was gravely wounded, and five others were freed safely.
Venezuela said it would propose another cut in production by the Organization of Petroleum Exporting Countries at the group's scheduled Dec. 14 meeting in Nigeria. Venezuela President Hugo Chavez wants to keep futures market prices close to $60/bbl for benchmark US crude. Venezuelan officials said they've already cut 138,000 b/d of production from the Orinoco heavy-crude area as a result the October agreement to reduce OPEC output by 1.2 million bbl.
Iranian officials said OPEC members are leaning towards another production cut. Saudi Arabia's oil minister has said his country might support another production reduction. "The market is still looking for signs of the previous cut enacted on Nov. 1. It seems obvious that the cartel seems determined to continue its quest of defending $60/bbl as the price floor for crude," said RJA analysts.
"US gas well decline rates continue to increase at an accelerated pace as advanced completion technologies allow E&P companies to extract more gas from smaller pockets more quickly," said RJA analysts Nov. 27. Based on a study of recent government and industry data, they said, "We come to the conclusion that a substantial increase in drilling rigs will be needed to offset the rising gas well decline rates and declining production per new well."
Energy prices
Crude prices rose but natural gas prices retreated in a holiday-shortened trading week of Nov. 20-22 on NYMEX. "Forecasts for above-normal temperatures across much of the country in the coming weeks underscored the retreat in natural gas prices," said Robert S. Morris, Banc of America Securities LLC, New York.
In London, the January IPE contract for North Sea Brent crude gained 68¢ to $60.03/bbl. Gas oil for December delivery increased by $7 to $536.25/tonne.
The average price for OPEC's basket of 11 benchmark crudes climbed by 31¢ to $55.29/bbl Nov. 24. So far this year, OPEC's basket price has averaged $61.42/bbl, up from an average $50.64/bbl for all of 2005.
Contact Sam Fletcher at [email protected].
