Volatile oil prices dip to lowest level in four months
Volatile oil prices dip to lowest level in four months
LONDON (AFP): Oil prices showed the most dramatic movement during last week, falling to their lowest level for four months at the beginning of the week, before rising later, while palm oil soared to its highest price in over ten years.
Initially, dealers believed the seven-week crippling oilworkers' strike in Nigeria was about to end as there were signs of a drift back to work, but Shell then closed one of its export terminals, and oil prices lifted again.
The price of Brent crude North Sea oil dropped through the key US$16-a-barrel level on Monday, for the first time in four months, as dealers believed the Nigerian oilworkers' strike could end soon.
Rod MacLean, analyst at Smith New Court, said dealers increasingly believed the seven-week oil strike, was winding down and could end, as "some of the workers are going back to work," particularly in the refineries and oil fields.
The strike, which began on July 4, is aimed at forcing Nigeria's military regime to release jailed opposition leader Moshood Abiola and install him as president.
Prices also fell as the end of the traditional July-August repair period for North Sea platforms neared its end. Dealers said the return to production in September could temporarily upset the balance of demand and supply.
But oil prices then lifted to around $16.4 a barrel on news that Shell International had closed its Forcados terminal in eastern Nigeria over the weekend. The terminal generally exports 500,000 barrels of crude a day.
Nigeria, OPEC's fifth largest producer, normally produces around two million barrels of oil daily or three percent of world production.
Meanwhile, palm oil soared to its highest price in over ten years on the Rotterdam market, as demand increased in the wake of a cut in production from Malaysia -- the world's number one producer -- and on a wave of speculative buying ahead of large- scale purchases by India and Indonesia.
Weak stocks and firm demand have seen prices rise since the beginning of the year. The specialist review Oil World, however, predicted a rise in world production to 13.82 million tons and 15.07 million tons in 1994 and 1995 respectively, compared to 13.68 million tons in 1993.