Oil prices charged toward $69 a barrel on Friday in a rally that mainly reflected fears of a possible loss of supply from Iran, which is in a diplomatic stand-off with the West over its nuclear ambitions.
Labour unrest in oil-rich Nigeria and new threats from al-Qaeda contributed to traders’ jitters at a time when global petroleum demand is high and the emergency-supply cushion is thin, leaving little room in the event of an output disruption.
Analysts said speculative buying by hedge funds and commodity funds also pushed crude higher.
The possible supply disruptions outweigh the fact that crude-oil inventory levels are at multiyear highs and that winter temperatures in the United States have been above normal, keeping demand for home-heating fuels low.
”The market is just gripped with anxiety about Iran,” said oil broker Andrew Lebow, of Man Financial in New York. ”It’s also concerned about Nigeria, where we actually have lost barrels. And we’ve also lost export barrels from Russia because of cold weather in Siberia that is driving up demand.”
That said, Lebow added that the market is ”completely decoupled” from the fundamentals of supply and demand.
On Thursday, energy traders brushed off a US government report that showed rising domestic inventories of oil and gasoline and sent crude futures their highest close in four months.
On Friday, light sweet crude for February delivery was up $1,87 at $68,70 in afternoon trading on the New York Mercantile Exchange.
Brent crude for March delivery traded at $66,10 a barrel on London’s ICE Futures exchange, up 87 cents.
Heating oil rose more than eight cents to $1,88 a gallon (3,8 litres), while gasoline gained more than three cents to $1,81 a gallon.
Tom Kloza, an analyst at Oil Price Information Service in Wall, New Jersey, said the retail price of gasoline will most surely rise higher in the weeks ahead and he predicted that $2,75 a gallon will be a reality for many US motorists by May.
Natural-gas futures advanced in sympathy with the surge in crude because some industrial users have the ability to switch between the fuels. Nymex gas futures gained 41,5 cents to $9,32 per 1 000 cubic feet.
International pressure is mounting on Tehran to turn away from resuming uranium enrichment, which it claims is for energy. The US and key European nations, which fear Iran wants to make weapons, have pushed for a referral of the issue to the United Nations Security Council. Iran insists its plans for enrichment are only to produce nuclear energy.
On Thursday, Royal Dutch Shell plc confirmed the death of a second catering contractor in an attack by armed militants on an oil platform in southern Nigeria, raising the death toll to 14. The series of attacks, including the rupture of a major Shell pipeline in the region, has forced the oil giant to evacuate more than 300 workers from four installations deemed vulnerable to attacks. The company cut production by 221 000 barrels a day as a result.
”Events in Nigeria appear to represent a significant and dangerous break from previous events, although we still see Iran as representing the major political risk to oil prices this year,” said Barclays Capital.
Adding to the so-called terror premium for crude was an audiotape released on Thursday in which Osama bin Laden warned that his fighters are preparing new attacks in the US. The tape was the first from the al-Qaeda leader in more than a year.
Meanwhile, the Organisation of Petroleum Exporting Countries (Opec) on Friday lowered its estimate for world oil demand in 2006 by 100 000 barrels a day to 84,83-million barrels a day.
When oil prices fell below $60 a barrel last month, Opec members talked of a possible need to trim output. But analysts say such a move would be highly unlikely with prices near $70 a barrel. — Sapa-AP