Oil prices break $50 barrier oil prices

01 October 2004
Oil prices briefly broke the $50-a-barrel mark in late September as new supply threats reared their heads and efforts from Washington, Moscow and Riyadh to calm the market failed. The impact of Hurricane Ivan and threats to foreign producers in Nigeria were the key market movers. Spot Brent was trading at $46.98 a barrel on 29 September, compared with $45.83 a barrel a week earlier.

US light crude futures moved above $50 a barrel on 28 September, with traders proving oblivious to the Energy Department's offer to lend crude from the strategic petroleum reserve (SPR) to refiners still suffering from hurricane-induced shortages. US stock data released on 29 September for the week to 24 September showed imports had recovered by 1.7 million barrels a day (b/d) to 9.9 million b/d and crude stocks had built by 1.3 per cent to 272.9 million barrels. Gasoline registered a marginal draw.

In Nigeria, a rebel group in the Niger Delta forced the Royal Dutch/Shell Group- the country's main foreign producer - to shut in a small amount of output, by threatening to target foreign oil workers. Shell and Italy's Agipwere specifically warned, as part of the group's demands for greater self-determination. The crisis eased on 29 September as reports emerged of a ceasefire with the government.

Moscow attempted to cool fears surrounding troubled oil giant Yukos in late September by assuring Beijing that its supplies would not be affected. Yukos accounts for 7 per cent of China's rampant consumption, but the company warned recently that supplies to China National Petroleum Companywould be suspended due to an inability to pay shipment costs. Moscow pledged to ensure a swift resolution of the problem.

Saudi Petroleum & Mineral Resources Minister Ali Naimi also tried to reassure a market concerned about the global lack of spare capacity. 'Saudi Arabia is desirous to provide adequate production capacity as soon as possible and for this purpose will use the Abu Safah and Qatif fields, which are now on stream, to hike its production capacity to 11 million b/d,' he said in a statement to the official Saudi Press Agency. 'In this regard, well drilling in producing fields will be intensified.' Current production is running at about 9.5 million b/d.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications