Crude rises due to Nigerian production disruption

Prices rise for the second consecutive day as production disruption slated to continue

Crude prices rose today, Thursday, 7 February, 2008 after dropping in the previous two sessions. Natural gas and fuel product prices also rose today after EIA reported another drop in natural gas inventories.

Crude-oil futures for light sweet crude for March delivery today closed at $88.11/barrel (higher by $0.97/barrel or 1.1%) on the New York Mercantile Exchange. Prices are 53% higher than a year ago. Earlier it fell to a low of $86.24/barrel.

Crude prices rose today after Royal Dutch Shell said that a disruption at a Nigerian terminal will last through March.

Yesterday, crude prices dropped more than 1% to close at $87.14 a barrel after the U.S. Energy Department reported that crude inventories rose by 7 million barrels in the week ending 1 February, much higher than the 2.5 million barrels expected.

Brent crude oil for March settlement today rose $0.73 (0.8%) to $88.51 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.

Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.

Natural gas in New York rose today after EIA report showed that U.S. supplies fell more than forecast. Gas for March delivery rose 10.8 cents (1.4%) to settle at $8.102 per million British thermal units.

EIA reported today that natural gas stockpiles declined 200 billion cubic feet to 2.062 trillion cubic feet for the week ended 1 February, against an withdrawal of 186 billion cubic feet.

Against this backdrop, March reformulated gasoline gained 2.79 cents to $2.2678 a gallon, and March heating oil rose 3.97 cents to $2.4585 a gallon.

Last week, Organization of Petroleum Exporting Countries decided to keep current output levels unchanged.

At the MCX, crude oil for February delivery closed at Rs 3,458/barrel, higher by Rs 24 (0.7%) against previous day’s close. Natural gas for February delivery closed at Rs 316.2/mmtbu, higher by Rs 3/mmtbu (0.95%).