Oil Prices Fall on OPEC Rumors
Perrine Faye, Agence France Presse
LONDON, 22 March 2005 — World oil prices fell yesterday on rumors that OPEC could again raise its oil production ceiling soon, but remained supported by the threat of a strike in the Nigerian energy sector.
New York’s main contract, light sweet crude for delivery in April, fell 37 cents to $56.35 per barrel in early deals, after earlier peaking at $57.12.
The contract had reached the highest closing on record last Friday, at $56.72, but below the all-time intraday high of $57.60 a barrel set last Thursday. In London, the price of Brent North Sea crude oil for delivery in May dropped 39 cents to $55.20 per barrel yesterday.
Ministers from the Organization of Petroleum Exporting Countries decided in the Iranian city of Isfahan last week to raise crude output from 27 million to 27.5 million barrels per day (bpd), saying they would consider a further 500,000 bpd increase, should prices remain high.
According to analysts, OPEC President and Kuwaiti Oil Minister Ahmad Fahd Al-Sabah said in discussions with fellow members that the second rise could be implemented “within ten days”. Rumors that the organization could again raise production soon helped push prices down in early deals, amid profit-taking.
Earlier yesterday, prices moved up “due to a warning strike in Nigeria next month,” Investec analyst Bruce Evers said.
Nigeria’s main oil unions backed down from calling an immediate strike to protest the use of casual labor yesterday but launched a new 21-day ultimatum to international energy giants and the government.
Brown Ogbeifun, national president of the white-collar oil union PENGASSAN, said his workers and their blue-collar colleagues would hold a three-day “warning strike” from April 11 unless the firms ceased using contract employees. “We met at the weekend with our sister union NUPENG in Port Harcourt to reach a consensus on the planned action. This became necessary since both the government and the oil companies appear unconcerned with our plight,” he said.
Nigeria is the world’s ninth-biggest oil producer and disruption to its exports of around 2.5 million barrels per day could send prices to new record high points. “This is the sort of supply disruptions people are concerned about. Nigeria produces light crude, which is good for refining into gasoline,” Evers said.
Gasoline, or petrol, is in strong demand ahead of the US summer driving season when Americans take to the roads for holidays.
