Crude oil rose, approaching a record, on concern an oil-workers' strike in Nigeria next month may lower exports from the country, Africa's largest producer.
Unlike strikes in Nigeria last year, the three-day walkout beginning April 11 will affect oil output, an official from the union representing senior staff said today. Prices earlier fell as much as 0.6 percent after the Saudi oil minister said OPEC is discussing a date for a second output quota boost this year. New York oil reached a record $57.60 a barrel last week.
``With continued strong demand for oil, any sort of supply disruption news just fuels the bull run,'' said Kevin Blemkin, a broker at Man Financial in London. ``The market disregards any bearish comments. We also thought prices would come down today because of the short trading week.''
Crude for April delivery rose 29 cents, or 0.5 percent, to $57.01 a barrel at 1:05 p.m. London time on the New York Mercantile Exchange. The contract, which expires today, ended at $56.72 on March 18, the highest close in more than two decades of futures trading. Brent crude for May added 18 cents to $55.77 on London's International Petroleum Exchange, up 38 percent this year. The contract peaked at $56.15 on March 17.
A decision last week by the Organization of Petroleum Exporting Countries, producer of about 40 percent of the world's oil, to raise output targets to a record 27.5 million barrels a day failed to ease concern that global oil demand is outpacing supply.
A 54 percent surge in New York crude prices in the past year sent average retail gasoline prices in the U.S. to a record $2.10 a gallon in the past two weeks, topping the previous record of about $2.07 on May 21, 2004, Trilby Lundberg said yesterday, citing a survey by her California-based research firm. Surging fuel prices may hurt the economy as consumers spend less, earmarking a bigger part of their income for transport.
The National Union of Petroleum and Natural Gas Workers of Nigeria will join the strike, Mojibayo Fadakinte, the general secretary of the white-collar Petroleum and Natural Gas Senior Staff Association of Nigeria, said in a telephone interview today.
``Oil production has to be affected,'' Fadakinte said. ``We are not exempting any sectors this time around.''
The walkout is aimed at protesting dismissals, working conditions and oil companies' practices of switching workers from paid employment to contract service and hiring too many expatriate workers instead of Nigerians, he said. Nigeria pumped about 2.38 million barrels a day last month, making it OPEC's sixth-largest producer, according to Bloomberg data.
OPEC raised its quota by 500,000 barrels a day on March 16, authorizing the group's president to implement a further boost of the same size if needed.
Date for Increase
``As far as I know he is already discussing the matter with the rest of OPEC ministers to choose a date to announce the increment,'' Ali al-Naimi, the Saudi Arabian oil minister, told reporters in Manila today. ``As a matter of fact, the actual production is probably already higher to meet growing demand worldwide.''
The second increase would take production quotas to 28 million barrels a day, above the 27.7 million a day OPEC was pumping last week, according to Sheikh Ahmad Fahd al-Sabah, OPEC's President and Kuwait's oil minister.
``This may be the increased commitment that's needed from OPEC,'' said Paul Goodhew, a broker at ABN Amro in London. ``They probably will be seen as more aggressive and it may be enough to lower Brent prices to below $55.''
Led by China and the U.S., oil demand is expected to rise 2.2 percent this year, or 1.8 million barrels a day, to a record 84.3 million a day, according to the International Energy Agency, which advises industrialized nations on energy. Last year, consumption climbed 3.4 percent, the biggest jump since 1976.
Vienna-based OPEC in recent years has reduced output in the second quarter to keep stockpiles from soaring when Northern Hemisphere winter heating demand dwindles. Last week's decision to raise production quotas, led by Saudi Arabia, marks a change of strategy because the group will let inventories rise to lower prices and meet demand, the London-based Center for Global Energy Studies, or CGES, said in a monthly report today.
``OPEC appears to have finally realized the importance of a big second-quarter'' inventory gain, said the CGES, founded by former Saudi Arabian oil minister Sheik Ahmad Zaki Yamani. ``Saudi Arabia in particular will have to be prepared to use its remaining capacity at short notice in the event of any supply disruption or continuing demand growth, if it really intends to keep prices below $50 a barrel.''
The Nymex and IPE exchanges will shut for the Good Friday holiday on March 25.