Tuesday, April 15, 2008

Oil Rises to Record on Nigeria, Mexico Losses, Chinese Demand

By Grant Smith and Christian Schmollinger

April 15 (Bloomberg) -- Crude oil rose to a record in New York on supply disruptions in Nigeria and Mexico and rising fuel demand in China.

Oil climbed to $112.85 a barrel on the New York Mercantile Exchange, the highest since futures began trading in 1983. Mexico, the U.S.'s third-largest crude supplier, shut its fourth export terminal yesterday, while Eni SpA halted output in Nigeria. China said today diesel imports surged 49 percent in March.

``The predominant market view is that the emerging economies will overcompensate for any possible demand slump in OECD countries,'' said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt.

Crude oil for May traded at $112.79 a barrel, up $1.03, at 11:54 a.m. in London. Prices have gained 77 percent in a year. Futures yesterday rose $1.62, or 1.5 percent, to settle at $111.76 a barrel, the highest close.

Record oil prices are crimping profits at airlines, boosting food costs and contributing to rising inflation across the globe.

Eni's Nigerian venture halted production at some oil wells following explosions on April 12 near the Beniboye area in Delta state, the company said yesterday. The shutdown, blamed on ``sabotage,'' has cost Eni about 5,000 barrels a day in output, the Rome-based company said in a statement posted on its Web site.

Petroleos Mexicanos, the third-largest supplier of crude to the U.S., shut its crude oil export terminal on the Pacific coast yesterday, the fourth terminal to close since April 13.

Terminal Closure

The terminal at the port of Salina Cruz closed today, Mexico's Merchant Marine reported in a weather bulletin posted on its Web site. The three Gulf of Mexico terminals at the ports of Pajaritos, Dos Bocas and Cayo Arcas remain shut.

Brent crude for May settlement rose as much as $1.27, or 1.2 percent, to $111.11 a barrel, an all-time intraday high, on London's ICE Futures Europe exchange. It traded for that price at 11:56 a.m. local time. The contract yesterday gained $1.09, or 1 percent, to close at a record $109.84.

Oil has risen 37 percent and the dollar has dropped 12 percent against the euro since the Federal Reserve began lowering interest rates Sept. 18. The euro traded at $1.5844 versus the dollar as of 11:23 a.m. in London from $1.5832 late in New York yesterday.

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