Oil price unmoved by Bali bombing

Oil price unmoved by Bali bombing

Agence France-Presse, London

The price of oil held steady Monday despite a weekend bomb attack on the Indonesia island of Bali and a warning from authorities in Jakarta that vital oil and gas installations may be on terrorists' hit lists.

Reference Brent North Sea crude for November delivery eased to US$27.95 a barrel here in early trading from 27.99 at the previous close.

In New York, benchmark light sweet crude November-dated futures closed Friday up U.S. 40 cents at 29.37 dollars.

Trading was expected to be quiet Monday owing to the Columbus Day holiday in the United States, though the New York oil market was open for business.

Traders here played down the ramifications of the Bali bomb, which left scores dead and dozens injured, raising concerns about another spate of terrorist attacks.

"The bombing does not appear to have had any direct effect on oil prices," said senior oil trader William Buchanan at Standard Bank.

"Some were expecting prices to strengthen 20 or 30 cents on renewed tension following the blast, but the market doesn't seem to be worried by it at the moment," he said.

"I think if oil facilities has been specifically targeted, the effect on prices would be different," he added.

The market also shrugged at a warning from Indonesia's top security minister Susilo Bambang Yudhoyono that terrorists may target vital oil and gas installations.

"The government has and will continue to step up security in vital projects," Yudhoyono told reporters in Jakarta, citing the Paiton power plant in East Java, the Bontang gasfield in East Kalimantan, the Arun natural gas operation in Aceh and the Caltex oilfields in Riau province.

"There are indications that these energy centers may possibly be targeted by terrorists," he said.

Lawrence Eagles, analyst at brokers GNI, also said that the bombing should have little relevance to the oil market.

"Politically the bomb was seen as a terrorist attack that would largely strengthen (U.S. President George W.) Bush's hand in his campaign against terror.

"There are even some reports linking the attack to al Qaeda.

"However, despite this, doubt it will have one iota of change on the stance of those at the UN Security Council considering a new resolution against Iraq," he wrote in a research note.

Traders were also mulling news that after a week of prevarication, Yemeni authorities were finally persuaded that a deadly blast which crippled a French supertanker off the Yemeni coast was an attack.

"The Yemenis are now convinced of the theory of a terrorist attack and no longer deny it during meetings with the U.S. and French experts," a source close to the investigation told AFP Sunday on condition of anonymity.

But the news came as little surprise to the oil market and had a limited impact on prices.