Oil prices test record high $120

ILONDON—Oil prices hit a historic peak close to 120 dollars on Monday as energy supplies were disrupted in Britain and Nigeria, traders said. New York’s main oil futures contract, light sweet crude for June delivery, jumped to 119.93 dollars on Monday, beating last Thursday’s previous peak of 119.90.
The contract later stood at 118.92 dollars, up 40 cents from Friday’s close. London’s Brent North Sea crude for June rose 22 cents to 116.56 dollars on Monday after striking an all-time high of 117.56 dollars on Friday.
“Crude hit record highs of 119.93 dollars amid supply disruptions in Nigeria and the North Sea which have underpinned oil prices since Friday and are likely to continue influencing the market in the short term,” said Sucden analyst Nimit Khamar.
“In Nigeria, unidentified gunmen over the weekend killed five police officers in the Niger Delta region, sparking concerns of further supply disruption in the area,” Khamar noted. In Britain, a strike at a Scottish refinery in Grangemouth, west of Edinburgh, has forced energy giant BP to shut down the neighbouring Forties pipeline which supplies 40 percent of the country’s oil and gas. Around 1,200 workers are staging a two-day walkout, which began on Sunday, in a dispute over proposed changes to their pension rights. The strike has sparked panic buying of motor fuel in parts of Britain. The Forties pipeline brings more than 700,000 barrels of crude oil ashore every day and supplies Britain and international markets. It cannot function without power and steam from Grangemouth. At the same time, Nigeria — Africa’s biggest crude producer — has also been hit by industrial action.
ExxonMobil’s Nigerian affiliate said Monday that a 5-day strike by white collar employees had caused output losses. A spokesman for Mobil Producing Nigeria (MPN) said the company was attempting to open talks with the strikers. He would not disclose the volume of the loss. Its production is normally about 780,000 barrels per day.
Members of the Petroleum and Natural Gas Senior Staff Association of Nigeria began the strike on Wednesday after pay and conditions negotiations with the management stalled. Union officials had warned the strike would “cripple exports.”. ExxonMobil is the second largest oil company in Nigeria after Royal Dutch Shell. Nigeria is Africa’s biggest producer with a daily output of 2.1 million barrels but unrest in the oil-rich Niger Delta has cut exports by a quarter since January 2006. Last week, Shell said it had reduced output by 165,000 barrels per day following the sabotage of pipelines to the Bonny export terminal in southern Nigeria. Over the past two weeks, crude prices have smashed through a series of record highs, sparking widespread international concern among consumer nations. The market has also been supported by a weak dollar, tightening global supplies and the OPEC cartel’s reluctance to raise output, traders said. Gas prices hit $3.60 a gallon and oil futures rose to their own new record near $120 a barrel on Monday as labor actions overseas threatened crude supplies. Oil prices later retreated to alternate between gains and losses as the dollar stabilized against foreign currencies.
At the pump, the national average price Americans pay to gas up rose 0.4 cent overnight to a record $3.603 a gallon, according to a survey of stations by AAA and the Oil Price Information Service. While prices are 66 cents higher than a year ago, their rate of increase has slowed some since last week, when prices jumped more than 2 cents a day several times. That could suggest that a price peak is near, analysts said. “I’ve got to think we’re close to the end on increases,” said Michael Lynch, president of Strategic Energy & Economic Research Inc. in Cambridge, Mass.
However, Lynch thinks prices could rise another 10 cents to 15 cents before they reach that peak and begin falling. Gas prices are rising in part because refiners are making the seasonal switch-over from making winter-grade gasoline to the more expensive, but less polluting, fuel they must sell during the summer. Supplies tend to fall while refiners are doing this as they try to sell off all of their winter gasoline

.—Agencies