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Oil steady above $122 a barrel after record

By GEORGE JAHN,

Posted: 2008-05-07 06:35:34

VIENNA, Austria (AP) - Oil prices steadied Wednesday after hitting a record near $123 a barrel in the previous day's session on worries over supply disruptions.

Prices were supported by concerns about supply disruptions in Nigeria, where production at a Royal Dutch Shell PLC facility was cut after a weekend attack. The main militant group in Nigeria's oil-rich southern region said Tuesday it is willing to cease hostilities if the federal government allows conflict mediation by a former U.S. president.

A string of pipeline bombings in recent weeks has cut oil production in Nigeria by tens of thousands of barrels per day, contributing to the sharp rise in oil prices. The country is Africa's largest producer and a major U.S. supplier.

Light, sweet crude for June delivery rose 5 cents to $121.89 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. The contract on Tuesday soared to a record $122.73 a barrel before retreating to settle at $121.84, up $1.87.

"Clearly there's a lot of concerns about supply at the moment. The market's very jittery on any type of news, particularly supply disruptions," said Mark Pervan, senior commodity strategist at ANZ Bank in Melbourne.

"There are many in the market who think these prices are as good as it gets and are positioned to see lower prices but we continue to see one-off supply issues keeping prices high," Pervan said.

The rise in crude futures also gained momentum Tuesday as investors bought on a Goldman Sachs prediction that oil prices could rise to $150 to $200 within two years.

Still, expectations that U.S. crude supplies increased last week were helping to limit oil's rise ahead of the release of the U.S. Energy Information Administration's report on fuel inventories later Wednesday.

Analysts surveyed by energy research firm Platts expected the report to show that crude oil inventories rose by 1.5 million barrels last week.

Gasoline stocks were projected to drop by 500,000 barrels, according to the Platts survey. Inventories of distillates, which include heating oil and diesel, were expected to have risen by 1.3 million barrels.

In its newsletter, Vienna's JBC Energy noted that the latest EIA forecasts on demand - an estimated 170,000 barrels a day lower in the second quarter of this year over the same period last year - also worked to keep a lid on prices and offered its own, lower forecast decline; 230,000 barrels a day.

In other Nymex trading, heating oil and gasoline futures were both up slightly at $3.3568 and $3.1024 a gallon. Natural gas futures were flat at $11.146 per 1,000 cubic feet.

In London, Brent crude futures rose 4 cents to $120.35 a barrel on the ICE Futures exchange.

Associated Press Writer Gillian Wong contributed to this report from Singapore.

Copyright 2008 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

05/07/08 06:34 EDT

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91 comments

IsleOfEire 12:53:24 PM May 07 2008

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Its The Bush Addiction That Has Killed This Country Not The Oil Addiction.

MSmailbox 12:47:58 PM May 07 2008

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I went out and bought a new motorcycle, recently... It's a dirt-bike and it's not street-legal, so this has not lowered my consumption of gas. Actually, hauling it by trailer, 60 miles to the dirt, has INCREASED my consumption! So, buying a motorcycle isn't always the answer. It always pays to think these things out, before you rush into a major purchase. That said, I am much safer riding where there is no traffic and I am enjoying the exercise.

Don't be fuelish!

Lasstrainer 11:56:08 AM May 07 2008

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so, if oil from the ground is used for energy, why can't oil from plants be used? I mean, I have seen on the news about people who buy kits to convert their cars for veggie oil to run their vehicles. Even if it had been used veggie oil. Heck, two birds with one stone here.

DotAyer 11:18:35 AM May 07 2008

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Just bought 10 shares of Oil. Can't beat 'em, join 'em.

KyMeEe 99 11:12:38 AM May 07 2008

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From the above article...
The rise in crude futures also gained momentum Tuesday as investors bought on a Goldman Sachs prediction that oil prices could rise to $150 to $200 within two years.

These are not predictions folks, the oil producers know exactly, what they are going to charge the world for oil, many years in advance. We are all becoming slaves to big oil, we are nothing more than popcorn in the kettle, they turn up the heat, so they can watch us all pop, to their power...Let us all work hard to get off this oil addiction. There are better ways!

wets4202tk 11:05:37 AM May 07 2008

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what are you doing this weekend are you marching on washington are you sending letters to congress no I guess not you are looking after your family welfar not the country and our problems Im not a big bush supporter but we all have a life and we all have an obligation to start taking back this country we need to potion repul and democrats to get these jerks off the ballot non of them are any good and as was written earler tell congree get off your asses and do the work you are employ to do or you will be fired and find other employment when your term is up or you can kick them out now for failure to perform in each state thats a thought

wets4202tk 10:56:56 AM May 07 2008

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when the cats away the mouse will play and we the people have been away
to busy allowing them to put confussing obstacals in our way.

wets4202tk 10:53:10 AM May 07 2008

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you need to read how our goverment works Bush cant do anything with out congress or did you forget congress runs this country. not the president his powers are limited.blame everyone but ourselves we put these people in office and left them in there for a life time job because we the people are to lazy to vote and get honest inteleget people to run we are at blame
we like comfort not be bothered and guess what look what we have made a goverment that is not by the people but by corporate intrest

KyMeEe 99 10:47:43 AM May 07 2008

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Bush keeps passing the Buck to Congress to fix the oil problems, that's laughable, because, congress cannot do anything about oil cost, and they all know it. Con-gress can't rewrite those old Saudi OPEC contracts, even if they wanted to. The contracts are to closely tied to the US Dollar, and in more ways than you could ever imagine, hence the high cost today...Just be thankful, you are not buying oil in euro's...If people would only quit watching the FIXED news.

wets4202tk 10:46:17 AM May 07 2008

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Bush does have a life too just like we have I would say screw you to and take care of my girls wedding you would do it to your work be real

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