Cars line up at for gas in Abuja, Nigeria. Nigerian unions threaten to strike if the government does not roll back a 15 percent hike in fuel prices and review a plan to sell two refineries.
(AFP/Getty Images)
Crude oil prices rise above $69
Nigerian strike threatens output
NEW YORK -- Crude oil in New York approached $70 a barrel for the first time since September after Nigerian unions planned a strike this week, threatening supplies from Africa's biggest oil producer.
Production is likely to be affected during the strike as Nigeria's two main oil unions plan to participate, a labor leader said. Nigeria produces low-sulfur, or sweet, crude oil, prized by US refiners because of the high proportion of gasoline it yields. New York oil reached a record $78.40 a barrel last July.
"The bulls are in complete control of the market right now," said John Kilduff, vice president of risk management at Man Financial Inc. in New York. "Nigeria is a very important source of oil that is needed by our very stressed gasoline production complex. The trouble in the Middle East, be it Iran, Lebanon, or even Pakistan, isn't hurting either."
Crude oil for July delivery jumped $1.05, or 1.5 percent, to $69.05 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $69.15 a barrel, the highest intraday price since Sept. 5. Prices are down 1.3 percent from a year ago.
Brent crude oil for August settlement rose 65 cents, or 0.9 percent, to $72.12 a barrel on the London-based ICE Futures exchange. Futures touched $72.25, the highest since Aug. 28.
"This is a new stage in a rally that started in 2003 because of supply pressures," said Antoine Halff, a vice president and head of energy research at Fimat USA in New York. "The US refining industry is constrained, non-OPEC production is disappointing, Nigerian production is disrupted, Venezuelan production is down, and Iran's will probably soon start to fall."
US gasoline supplies in the week ended June 8 were 5.2 percent below the five-year average for the period, the Energy Department said last week. The department will report tomorrow that gasoline stockpiles rose 1.38 million barrels last week, according to the median of 13 responses in a Bloomberg News survey.
"If we don't get a strong gasoline inventory number this week we could easily hit $70 in the next week," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Mass. "Inventories are weak, so every threat to supply is magnified."
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