Sunday, April 27, 2008

Oil Rises to Record on U.K. Pipeline Shutdown, Nigeria Attack

By Gavin Evans

April 28 (Bloomberg) -- Crude oil rose to a record after BP Plc shut a North Sea pipeline and gunmen attacked a police station in Bonny Island, the site of one of Nigeria's largest oil and gas export terminals.

BP closed the Forties Pipeline System, carrying 40 percent of the U.K.'s oil output, after a strike at the Grangemouth refinery cut power supplies to the network. The refinery will re-start tomorrow morning local time. Five Nigerian police were killed and guns and ammunition seized in yesterday's attack on their station, Niger Delta police officials said.

Crude oil for June delivery rose as much as $1.41, or 1.2 percent, to $119.93 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since the futures began trading in 1983. It was at $119.31 at 8:56 a.m. in Sydney.

The contract gained 2.1 percent at $118.52 a barrel on April 25 when the refinery strike and pipeline closure were announced.

Brent crude for June settlement rose 66 cents, or 0.6 percent, to $117 a barrel London's ICE Futures Europe exchange. It reached a record $117.56 on April 25.

New York oil futures are 79 percent higher than a year ago, with almost a quarter of that gain booked this month as the falling dollar and declining U.S. gasoline stockpiles spurred fund managers to invest in fuel and crude oil.

Hedge Funds

Hedge fund managers and other large speculators increased their bets on rising oil prices a third time in the week ended April 22, according to U.S. Commodity Futures Trading Commission data. Net-long positions, the difference between orders to buy and sell the commodity, rose 6 percent to 70,562 contracts, the commission said April 25.

Oil grades from the North Sea and Nigeria, Africa's biggest producer, are low in sulfur and favored by refiners.

U.S. refineries usually bolster output in May as they prepare for the peak-demand summer driving season in the world's biggest oil consumer. Gasoline deliveries usually peak June through August.

Nigeria is losing about 50 percent of its oil production because of a strike at Exxon Mobil Corp.'s operations in the country and militant attacks on a Royal Dutch Shell Plc pipeline, the country's oil minister H. Odein Ajumogobia said April 25.

Nigeria, Africa's leading oil producer, pumped 1.96 million barrels a day in March, according to Bloomberg estimates. Recent attacks on Shell-run pipelines, including the latest one, is cutting oil flows by about 140,000 barrels a day, Ajumogobia said. The Exxon Mobil strike is halting about 765,000 barrels a day, according to union estimates.

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