Oil jumps on refinery strike

A two-day strike at a refinery in Grangemouth, Scotland, that began today has forced energy giant BP to shut down the neighbouring Forties pipeline which supplies 40 per cent of Britain's oil and gas.

It is the first time in more than 70 years that a strike has forced the closure of a British refinery.

The 48-hour strike over changes to pension plans has sparked panic buying of motor fuel in parts of Britain. It is due to end at 3pm AEST today.

"The supply losses from the Forties pipeline and Nigeria are fairly substantial and are likely to have large physical consequences, which could push crude prices above the psychological $US120 mark," said Sucden analyst Nimit Khamar.

The Forties pipeline, which depends on the Grangemouth refinery for power, brings more than 700,000 barrels of crude oil ashore daily and supplies Britain and international markets.

Nigeria, meanwhile, has also been hit by industrial action.

ExxonMobil's Nigerian affiliate said today a five-day strike by white-collar employees had caused output losses.

A spokesman for Mobil Producing Nigeria (MPN) said the company was attempting to open talks with the strikers. He would not disclose the volume of the loss. Its production is normally about 780,000 barrels per day.

Members of the Petroleum and Natural Gas Senior Staff Association of Nigeria began the strike on Thursday after negotiations on pay and working conditions with management stalled.

Nigeria has a daily output of 2.1 million barrels but unrest in the oil-rich Niger Delta has cut exports by a quarter since January 2006.

Last week, Shell said it had reduced output by 165,000 barrels per day following the sabotage of pipelines to the Bonny export terminal in southern Nigeria.

Crude Oil Prices Push Up To $ 120 per barrel

World oil prices pushed higher on Monday, closing in on 120 dollars after the shutdown in Britain of a major North Sea pipeline added to supply worries, analysts said.

New York's main oil futures contract, light sweet crude for delivery in June, gained 88 cents to 119.40 dollars after closing 2.46 dollars higher at 118.52 dollars a barrel on Friday at the New York Mercantile Exchange.

New York crude reached an intraday record of 119.90 dollars last week.

Brent North Sea crude for June delivery rose 96 cents to 117.30 dollars a barrel after a rise of 2.00 dollars to 116.34 dollars on Friday, when the contract hit a record intraday peak of 117.56 dollars.

Britain on Sunday shut down a North Sea pipeline which supplies 40 percent of its oil and gas, sparking panic-buying of petrol after a strike at a major refinery.

The start of a two-day walkout by around 1,200 workers at the Grangemouth refinery, west of Edinburgh, in Scotland, forced the neighbouring Forties pipeline to close down at the same time, operator BP said.

The pipeline brings more than 700,000 barrels of crude oil ashore every day and supplies Britain and international markets. It cannot function without power and steam from Grangemouth.

Oil Climbs to $ 119 per barrel

Oil climbed above $119 a barrel on Friday after a workers strike cut production in Nigeria and tensions rose between the United States and Iran.

U.S. crude futures surged $3.15 to $119.21 a barrel by 1454 GMT, within striking distance of the all-time peak of $119.90 reached on Tuesday.

London Brent crude traded $2.98 higher at $117.32 a barrel, after hitting a new record of $117.51 earlier in the session.

A ship contracted by the U.S. Military Sealift Command fired at least one shot toward an Iranian boat, a U.S. defense official said. No further details were immediately available.

The United States in January said Iranian boats threatened its warships along a vital route for crude oil shipments.

Oil also found support from a significant cut in Nigerian production due to a workers strike and rebel attacks.

"You have everything coming together and that's lifting us off again," said Tom Bentz, analyst for BNP Paribas Commodity Futures in New York.

A strike by Nigerian workers at Exxon Mobil has forced the company to shut down some 200,000 barrels per day of crude oil output, a senior union official said.

Exxon has surpassed Royal Dutch Shell as the top foreign oil producer in Nigeria after Shell was struck by repeated militant attacks on its facilities.

Nigerian rebels said on Friday they had sabotaged an oil pipeline in the Niger Delta belonging to Royal Dutch Shell late on Thursday.

Oil Prices Rise

Oil prices rose a bit higher Wednesday after a US government report said stockpiles of gasoline fell more than expected and crude supplies exceeded analysts' estimates.

U.S. light crude for June delivery rose 23 cents on the New York Mercantile Exchange to settle at $118.30 a barrel.

In its weekly inventory report, the U.S. Energy Information Administration, a government agency that measures oil and gas supplies, said gasoline supplies fell by 3.2 million barrels. Analysts were looking for a a 2.1 million barrel drop, according to a Dow Jones poll.

Distillates - used to make heating oil and diesel fuel - also dropped, falling by 1.4 million barrels. That was more than the 300,000-barrel fall in supply that analysts had expected.

But crude stocks rose by 2.4 million barrels last week. Analysts were looking for a rise of 1.1 million barrels.

Crude Oil Nears $ 120

Crude oil futures closed above $US119 a barrel for the first time on Tuesday due to signs of shaky supply, sturdy global demand and a fresh low for the US dollar.

Light, sweet crude for May delivery settled at $US119.37 a barrel, up $1.89, or 1.6 per cent, on the New York Mercantile Exchange and in intraday trading rose as high as $US119.90. The May contract expired Tuesday. More active June Nymex crude settled at $US118.07 a barrel, up $US1.44.

June Brent crude on the ICE futures exchange in London settled at $US115.95 a barrel, up $US1.52, also a record.

Oil is now nearly double its closing price a year ago, and up 24 per cent in 2008. The latest impetus for buying came as Nigeria suffered further interruptions in output and China reported record oil imports last month.

"There doesn't seem to be anything on the horizon that makes you want to get out of black gold," said George Gero, vice president of global futures at RBC Capital Markets in New York.

Nigeria, already running below capacity because of security problems, was buffeted again after rebels hit two oil pipelines there Monday. Royal Dutch Shell PLC has been unable to gain access to the pipelines, which feed into a key export terminal, a spokesman said. On Monday, a joint venture that includes Shell said it had been forced to shut in about 169,000 barrels a day of crude exports from its Bonny terminal in southern Nigeria through May after a separate pipeline attack last week.

A threatened labour strike at Ineos PLC's 196,000 barrel-a-day Grangemouth refinery in the UK also stoked worries that a shutdown could disrupt production from North Sea oil fields.

At the same time, global oil demand is expected to rise about 1.3 million barrels a day this year to 87.2 million barrels a day, according to the International Energy Agency. Tempering concerns about the demand impacts of a slowdown in the US economy, China imported a record 4.09 million barrels a day of crude oil last month, final data from its General Administration of Customs showed Tuesday.

"From the point of view of investors, the supply and demand fundamentals don't look like they are going into oversupply territory anytime soon," said Bart Melek, commodities strategist at BMO Capital Markets in Toronto.

A major conference of the world's largest oil consumers and producers ended Tuesday with a measured statement about the risks of oil prices. The International Energy Forum, after meeting in Rome this week, said in a statement that "oil prices should be at levels that are acceptable to producers and consumers to ensure global economic growth, particularly in developing countries."

Crude oil hits another record

Crude oil for May delivery rose to a record $117.76 a barrel Monday on the New York Mercantile Exchange before settling at $117.48, up 79 cents from Friday's close.

Nationally, retail gas prices jumped more than a nickel over the weekend to an average of $3.50 a gallon, and are up 23 percent from a year earlier.

In Tulsa, the common price of gasoline rose a dime Saturday to a local record of $3.29. By Monday afternoon, that price still was holding, although a few retailers were observed charging $3.39.

Crude oil prices increased Monday after an attack on a Japanese oil tanker in the Middle East.

Many analysts expect fuel prices to keep climbing as they trace the path of crude, which has surged to new records for six trading sessions in a row.

Oil prices are rising along with a host of commodities, from corn and wheat to gold and platinum, that are enticing speculators seeking hedges against a weakening dollar.

Oil At Record Heights

For the second week in a row, crude oil has recorded the maximum rise. The price on futures counter in New York was up close to 6% closing the week at $116.69 per barrel. On domestic front, crude oil gained by close to 4% and the May contract on MCX closed at Rs 4,532 per barrel. In London, brent crude futures rose $1.49 to settle at $113.92 a barrel on the ICE Futures exchange.

Analysts indicated that the main reason for the flare up in crude price towards the end of the week was an attack on a pipeline in Nigeria. Besides, the weak dollar, and supply worries have kept the price high.

An International Energy Agency report pointed out that Russian oil production dropped for the first time in a decade, raising concerns whether the key oil-producing nation will have enough supply to help cater to growing global demand.

Another factor was the lower refinery utilisation. According to analysts, the refiners in America are trying to create an artificial shortage of gasoline and other distillates. Gasoline supplies have declined over the past five weeks to the lowest since January as refiners cut their processing rates.

The refineries are running at 80% capacity and this could lead consumers to dip into the gasoline storage, particularly when driving season picks up. This is expected to happen despite the high price. The peak gasoline consumption period in the US, known as the summer driving season, extends from the end of May through the beginning of September.

Oil Races Ahead to $117 per barrel

The price of crude oil was pushed higher after a militant group in Nigeria said it had sabotaged a major oil pipeline operated by a Royal Dutch Shell PLC joint venture and promised further attacks on the country's petroleum industry.

A spokeswoman for Shell confirmed that the pipeline was leaking, and said the damage appeared to have been caused by explosives. Nigeria is a major supplier of oil to the U.S.

The escalation in crude prices threatened to further boost gasoline costs.The spike in the cost of fuel is hurting consumers already feeling the effects of a slowing economy, a sluggish job market and falling home values. Soaring prices of diesel, which runs most of the world's trucks, trains, ships and heavy equipment, is a major factor pushing food prices higher.

Attacks since early 2006 on Nigerian oil infrastructure by the Movement for the Emancipation of the Niger Delta have cut nearly one-quarter of the country's normal petroleum output, boosting oil prices.

Oil's gains on Friday were limited by the dollar, which strengthened against the euro, sending oil prices lower earlier in the day. A stronger dollar makes commodities such as oil less attractive to investors as a hedge against inflation, and it makes oil more expensive to investors overseas. Analysts believe the weaker dollar is the primary reason oil has soared well past $100 a barrel this year.

Oil At Record Heights

Oil prices held near a record above $115 a barrel Friday amid concerns about falling supplies and rising global demand.

A host of supply and demand concerns in the U.S. and abroad, as well as the depreciating dollar, have pushed crude prices up more than 4 percent this week.

Light, sweet crude for May delivery rose 15 cents to $115.01 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.

On Thursday, the May contract hit a trading record of $115.54 a barrel in European trading hours as the dollar fell to a new low against the euro. Crude finished the floor session down 7 cents at $114.86 a barrel after falling back when the dollar strengthened.

"In general, a weak U.S. dollar ... has some valuation effect on oil prices and other commodities," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney.

Investors have been buying oil contracts as a hedge against the weakening dollar, betting that rising commodity prices will offset dollar declines.

Prices were supported by a U.S. Energy Department report on inventories, released Wednesday, that showed gasoline supplies fell 5.5 million barrels last week — much more than what analysts had expected.

That slide comes as the U.S. heads into its peak summer driving season, a period when demand and retail gasoline prices surge. The department's Energy Information Administration report also showed crude inventories fell 2.3 million barrels for the same period.

Oil On New Hieghts

Crude oil was little changed above $113 a barrel in New York after touching a record yesterday as investors purchased commodities because their returns have outpaced stocks, bonds and other financial instruments.

Oil climbed to $114.08 a barrel yesterday, the highest since futures began trading in 1983. Rising global demand for raw materials and a weakening U.S. dollar have led to record prices this year for commodities including corn, rice and gold. China's imports of diesel fuel jumped 49 percent in March while crude inflows climbed 25 percent during the month.

``Oil is matching gold as a hedge on the dollar so it's certainly being seen as a financial instrument,'' said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``The market is looking for positive news and the Asian growth story is going to grab more momentum.''

Crude oil for May delivery was at $113.60 a barrel, down 19 cents, at 9:25 a.m. Singapore time in after-hours electronic trading on the New York Mercantile Exchange. Oil closed at a record $113.79 a barrel yesterday.

Oil Reaches Record Heights

Gas and diesel pump prices jumped to yet another record Friday, piling on the costs for motorists as well as consumers reliant on trucks, trains and ships that deliver goods to market.

Retail gasoline rose 0.8 cents to a national average of $3.365 a gallon, although drivers in California could expect to pay nearly 30 cents more for regular and over $4 a gallon for higher grades, according to AAA and the Oil Price Information Service.

The increase marks the latest in a series of retail gasoline records in recent weeks, and leaves drivers paying 56 cents more a gallon now than they did a year ago. And there may be more to come.

"We do think prices, particularly for self-serve regular, are going to continue to go up," AAA fuel price analyst Geoff Sundstrom said.

Oil prices also edged higher in a late-day push, but remained more than $2 below an all-time high set earlier in the week. Light, sweet crude for May delivery rose 3 cents to settle at $110.14 on the New York Mercantile Exchange.

Analysts expect gasoline prices will continue to set records as more drivers take to the roads as summer approaches and refineries complete their conversion to more expensive summer-grade fuel. It is unclear how high prices will go, however, because a bigger fuel bill could convince some drivers to cut back.

"I still do not believe there's enough strength in demand that it's going to justify that move to $4 a gallon" nationwide, said Tom Kloza of the Oil Price Information Service in Wall, N.J.

Oil Gains 2 %, Rises To 107 $

Oil prices rose half a dollar to a one-week high near $107 a barrel on Monday, extending last week's late rebound after the dollar fell and a fire hit a U.S. refinery.

U.S. light, sweet crude for May delivery rose 52 cents or 0.5 percent to $106.75 a barrel by 0006 GMT after having leapt $2.40 a barrel on Friday, recouping all of the week's earlier losses as investors sought shelter from the falling U.S. dollar.

The dollar fell on Friday after a U.S. government report showed employers slashed payrolls a third straight month in March, cutting 80,000 jobs, the biggest monthly decline in five years. But it recouped much of its losses later on Friday, as traders said the data was not a big surprise.

Investors have been shifting funds toward the commodities sector for years, a trend that many analysts see continuing as they seeking protection from inflation.

"The key driver will be continued financial investors inflows into oil," said Societe Generale in a report, reasserting their $107.50 forecast for average oil prices in the second quarter.

"On balance, we take comfort in the fact that front-month crude prices appear to have found a floor at $100, and appear to be trending sideways."

Gains were also fueled by news of a fire at Exxon Mobil's 150,000 barrel per day Los Angeles-area refinery in Torrance, California, which forced the closure of a hydrotreater, raising concerns about summer gasoline supplies.

Oil Prices Rebound

Crude oil futures rebounded Friday after falling a day earlier as the U.S. currency stabilized and prompted selling by investors that had been buying crude as a hedge against inflation.

Oil prices have held above $100 a barrel for more than a month, largely on the view that crude, gold and other hard commodities are effective hedges against a falling dollar and rising prices.

As the dollar has started to recover against the yen and euro, investors have been less prone to pour money into oil for reasons unrelated to supply and demand. Still, with long term prospects bleak for the U.S. currency, oil remains attractive as an investment.

Light, sweet crude for May delivery rose $1.46 to $105.29 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. The Nymex crude contract settled $1 lower at $103.83 a barrel on Thursday.

Prices, analysts say, remain caught between those that want to buy oil as a hedge against another reversal in the dollar and those saying slowing economies worldwide will cut demand for fuel and energy.

On Wednesday, the front-month crude futures contract gained nearly $4 after a report showed a bigger-than-expected fall in U.S. gasoline inventories.

Since the report, gasoline prices have led the market. The drawdown in gasoline inventories completely overshadowed a massive 7.3 million barrels increase in crude oil stocks. Traders are also focusing on the low refinery utilization of 82.4 percent, which suggests further stock tightening for motor fuel just ahead of the Northern Hemisphere summer driving season.

But Wednesday's inventory report also showed U.S. gasoline demand remains weak despite ticking slightly higher.

At the same time, analyst Stephen Schork suggested pressure on heating oil supplies, noting that a recent cold snap in parts to the U.S. led to "nationwide aggregate heating demand in the Great Lakes (that) was nearly 20 percent above normal."

By afternoon, heating oil futures had risen by more than 2 cents to $2.9464 a gallon.

Crude Oil Futures Fall

Oil futures declined on Thursday as a report on jobs added signals of a gloomy outlook in the economy of the United States. Investors worry demand from the top consumer of oil in the world may curb.

A report on jobs data put pressure in oil prices as first time applications for jobless benefits rose to 407,000 on the week ended March 29, the highest since 2005.

Despite yesterday's unexpected data of a 4.53 million barrel decline in gasoline stockpiles, gasoline inventories remain more than 9 percent above their average.

The U.S. Energy Department said yesterday, demand of crude oil slumped more than 479,000 barrels per day in the United States, in the first 13 weeks of 2008 compared to the year 2007.

"Yet the truth is that demand for oil over all is weakening" said Phil Flynn vice president of futures brokerage Alaron Trading Corporation in a research note today.

Crude futures for May delivery fell 0.58 cents or 0.55 percent to $104.25 a barrel on the New York Mercantile Exchange by 4:35 p.m. Futures rose more than $3 after the report from the Energy Department was released yesterday.

Brent crude fell $1.22 or 1.17 percent to $102.63 a barrel in London's ICE Futures Exchange.

On Wednesday, the Federal Reserve Chairman Ben Bernanke said for the first time that the economy in the U.S. may fall into recession in the first semester of 2008.

Oil Dips Below 100 $, Rises Back

Oil fell having jumped by over $4 yesterday on profit taking and amid some concern about demand weakness but tight U.S. gasoline stocks, which had helped prices surge yesterday, limited losses.

New York's main WTI benchmark jumped yesterday after the United States reported its gasoline stocks fell by more than the market had expected. Crude stocks, meanwhile, rose above expectations but this was not enough to stop prices surging.

"The stats out in the U.S. revealed a crude build of 7.4 million barrels, significantly above the forecast levels which would have been bullish for oil were it not for the gasoline stock number which came in at over double the forecast," said Bank of Ireland analyst Paul Harris. "The 4.5 million barrel decline in gasoline is important coming as it does ahead of the driving season in the U.S., the peak demand period."

Uncertainty over the global demand outlook has also weighed on prices this morning, however, after United States Federal Reserve Chairman Ben Bernanke said yesterday that the world's biggest economy may slip into a recession, the first time that he acknowledged that possibility.

"Despite yesterday's run higher, we think it is unlikely that we will be revisiting the recent highs anytime soon. Gasoline alone is not capable of sustaining the advance, as the complex is facing twin prospects of relatively high stocks and anaemic demand," said MF Global analyst Edward Meir. "We cannot fathom how commodities can push to new highs just as the odds of a potentially worldwide recession intensifies.

"The macro backdrop, which has looked weak in the U.S. for some time now, is starting to impact worldwide growth prospects at a faster rate," he added.

Oil Prices slide as dollar gaiins

Oil futures extended their slide Tuesday as the dollar gained ground, making commodities such as energy futures less attractive to investors seeking a hedge against inflation. But trading was choppy as a debate among investors over oil's direction played out in the marketplace.

Retail gas prices, meanwhile, slipped slightly from the record they set one day earlier.

Investors who previously bought commodities such as oil as a haven against inflation and a falling dollar sold Tuesday as the greenback strengthened against the euro and other currencies. The stronger dollar also made oil more expensive to overseas investors.

Many analysts say oil investors have taken most of their price cues in recent months from gyrations in the dollar.

"The dollar's stronger, and (therefore) oil's weaker," said Brad Samples, an analyst with Summit Energy Services Inc., in Louisville, Ky.

Light, sweet crude for May delivery fell 60 cents to settle at $100.98 a barrel on the New York Mercantile Exchange after earlier falling as low as $99.55. Oil futures fell $4.04 a barrel on Monday.

But oil prices surged as high as $102.55 at times Tuesday as the early dip below the psychologically important $100 level drew buyers betting that high demand will give crude prices room for a further advance. Many large funds that invest in commodities such as oil craft strategies for their traders to automatically buy when prices fall to what they consider key support levels.

The strategies are based on a theory that global demand for oil supports higher prices, despite falling demand and higher supplies in the U.S.

"There's a lot of technical support down below $100," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.

Tuesday's oil price uncertainty reflects a debate among investors over oil's future direction. Many analysts believe dollar-induced buying has driven oil prices far beyond levels that can be justified by supply and demand or economic conditions. The second quarter of the year, which began Tuesday, typically sees the lowest petroleum demand. The country's appetite for oil and gasoline have fallen sharply since January, and oil supplies have mostly risen in recent weeks.

But other investors see continued strong demand for oil and fuel from China and India as a sign that oil prices have further to rise, despite demand and supply dynamics in the U.S.