Oil prices ‘unlikely to fall soon’

Crude oil futures rose back above $67 a barrel on Friday on persistent supply fears linked to Iran’s nuclear stand-off with the international community and militant attacks in Nigeria.

Adding to the bullish tone, Saudi Arabia’s Oil Minister, Ali Naimi, said prices are unlikely to fall in the near term.

Light, sweet crude for March delivery gained $1,12 to $67,38 a barrel in electronic trading on the New York Mercantile Exchange.

March Brent crude futures on London’s ICE Futures exchange rose 95 cents to $65,87 a barrel.

”After weakening during the week, crude futures finally reacted to supply worries currently abounding in the market,” PVM Oil Associates of Vienna said in a report.

Heating oil gained more than three cents to $1,8090 a gallon (3,8 litres), while gasoline advanced nearly four cents to $1,7200 a gallon.

”Geopolitical tensions remain in Iran and Nigeria,” said Victor Shum, energy analyst at Purvin & Gertz in Singapore. ”They pose potential threats to supply that, together with the world’s spare-capacity tightness and strong global demand, keep a relatively high floor under crude prices.”

Naimi said prices are not likely to drop in the near term even though supply and demand are balanced.

”I have no control over prices. We accept that they’re high and, of course, we want them to come down,” Naimi said in New Delhi, where he is visiting as part of a state delegation.

His remarks come ahead of a closely watched meeting of the Organisation of Petroleum Exporting Countries (Opec) in Vienna on Tuesday.

Opec president Edmund Daukoru, asked at the World Economic Forum meeting whether the global economy could live with crude oil prices at $60 barrel, Daukoru said: ”I honestly think it can.”

”Opec is committed to supplying the market at a reasonable price. Of the two, we’re more committed to supplying the market and keeping it stable. I can’t fix the price,” he said.

Markets were also concerned about the dispute between Iran — the second-largest oil producer in Opec — and the West over the restarting of its nuclear programme. Iran insists the program is aimed at generating electricity, while the United States and several European countries fear it could lead to nuclear weapons.

In Nigeria, four foreign oil workers were kidnapped at a Shell oil platform in the Niger Delta on January 11. Militants who say they are holding the men are demanding the release of two tribal leaders and for Shell to pay local communities $1,5-billion in compensation for oil pollution.

The kidnappings came amid a spate of attacks on oil installations in Africa’s largest oil exporter that have forced companies to evacuate hundreds of their workers and cut 10% of the country’s daily oil output.

Meanwhile, natural-gas futures rose 30 cents to $8,530 per 1 000 cubic feet, after falling 23,1 cents to $8,229 in the previous session — their lowest level in almost six months, after US government data showed domestic inventories were well above the five-year average for this time of year.

Above-normal winter temperatures in the US have helped moderate demand, soothing a market that had otherwise been jittery because 16% of daily natural-gas production in the Gulf of Mexico remains shut-in nearly five months after Hurricane Katrina ripped through the region, knocking out platforms, pipelines and processing plants. — Sapa-AP

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