Crude ekes out gains

Prices rise more than 1% as production is disrupted at Nigeria

Crude prices rose today at New York after Royal Dutch Shell reduced Nigerian production because of an attack on a pipeline by militants. Comments from Iranian president regarding global crude supplies also helped in lifting the prices higher and the weak dollar. But the price gains were checked as investors continued to be worried about oil demand from US in the long run.

Crude-oil futures for light sweet crude for September delivery closed at $124.73/barrel (higher by 1.47/barrel or 1.2%) on the New York Mercantile Exchange. The contract rose as high as $124.80 during the regular trading session, but traded as low as $122.70. Last week, prices coughed up $6.5 (4.8%). It's now 15% lower than the $147.27 record high hit last on Thursday, 10 July, 2008.

Last night, pipelines at Nigeria were attacked and the rebel group, the Movement for the Emancipation of the Niger Delta, or MEND, claimed responsibility for the assault. Shell said that the company shut some output, but didn't specify the amount.

Iran's President Mahmoud Ahmadinejad said today that his country has 6,000 uranium-enriching centrifuges, and the producer has threatened to blockade the Strait of Hormuz, the export channel for a quarter of the world's crude oil, if its nuclear facilities are targeted.

Crude prices gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. It ended June 2008 higher by 9.9%. Prices are 62% higher than a year ago. For the year, crude is up by 32% till date.

At the currency markets on Monday, the dollar wavered between positive and negative territory against most major counterparts. The dollar index, which measures the dollar against a trade-weighted basket of currencies, was at 72.68, down from 72.811.

Last week, EIA’s weekly inventory report showed that an economic slowdown is taking toll on energy demand. Over the past four weeks, U.S. motor gasoline demand has averaged 9.3 million barrels per day, down by 2.4% from the same period last year.

Against this background, August-reformulated gasoline gained 3.8 cents to close at $3.07 a gallon and August heating oil gained 3.9 cents to finish at $3.562 a gallon.

Natural gas in New York advanced as the lowest prices for the fuel in four months attracted speculators. Natural gas for August delivery rose 7.9 cents (0.9%) to settle at $9.163 per million Btu. The August delivery contract expires tomorrow. Gas for September delivery rose 6.9 cents (0.8%) to settle at $9.195 per million Btu.