Supply Worries Push Oil Over $118 A Barrel

(CBS/AP)  Oil prices rose Tuesday to a new record above US$118 a barrel supported by concerns about crude supplies from some key producers.

Light, sweet crude for May delivery rose as high as US$118.05 a barrel in electronic trading on the New York Mercantile Exchange, eclipsing Monday's all-time high of US$117.83.

By midday in Europe, the contract had risen to US$117.77, up 29 cents on Monday's close of US$117.48 a barrel. The May contract expires at the end of trading Tuesday.

In London, Brent crude futures added 28 cents to US$114.71 a barrel on the ICE Futures exchange.

A Royal Dutch Shell PLC joint venture in Nigeria said Monday it may have to cut crude deliveries some 169,000 barrels a day in April and May because militants sabotaged a pipeline last week in the country's south.

The company, Shell Petroleum Development Co., declared force majeure on its April and May oil delivery contracts from its 400,000-barrel-a-day Bonny fields, effective April 22, a move that protects it from litigation if it fails to deliver on contractual obligations to buyers.

Militancy and lawlessness has grown in recent years in Nigeria's south, and attacks on oil infrastructure have become common.

"The disruption in Nigeria with Royal Dutch Shell is serious," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

"It is light, sweet crude, which is much desired by the U.S. market during the summer gasoline season, so that certainly has affected the market," Shum said.

Prices at the pump are already reflecting the woes in the oil market, as CBS News correspondent Thalia Assuras reports the price of gasoline is now at an all-time high, averaging $3.51 a gallon.

Nigeria is a major supplier to the United States. Attacks there in the past two years have cut nearly a quarter of the African country's oil output.

Crude oil also rose Monday after the 150,000-ton tanker Takayama was attacked off the coast of Yemen as it headed for Saudi Arabia.

Kyodo News agency reported that the Japanese tanker was fired on by a rocket launcher from a small boat. None of the ship's 23 crew members was injured, the company said, but hundreds of gallons of fuel leaked before a 1-inch hole in the tanker's stern was repaired.

Analysts said comments Tuesday by the head of the Organization of Petroleum Exporting Countries about plans to boost oil production target capacity by 5 million barrels a day by 2012 would not have an immediate effect on oil prices.

Speaking at an energy forum in Rome, OPEC Secretary-General Abdalla Salem el-Badri told reporters that issues of supply and demand were being discussed but he did not expect any agreement on whether prices are too high or too low.

"This is not anything new and it will not help ease oil prices," said Ehsan ul-Haq, head of research at JBC Energy in Vienna, Austria. "The oil futures market is very strong, but the physical markets are not so strong."

Other supply developments also factored into the market. In Mexico, oil production slipped 7.8 percent in the first quarter to 2.91 million barrels a day as output at the country's traditional oil fields wanes, state oil company Petroleos Mexicanos said. In Scotland, workers at Ineos PLC's 196,000 barrel-a-day Grangemouth refinery and petrochemical plant have threatened to strike for 48 hours from April 27 over changes to an employee pension plan.

The weak U.S. dollar has continued to support oil prices despite strengthening some this week against the yen and euro. Commodities such as oil and gold are still attractive hedges to investors seeking hedges against further drops in the currency.

Consumers are learning to cope with the record prices by changing their attitudes about fuel consumption.

Jack Gillis of the Consumer Federation of America said, "Sixty per cent indicated that rising gasoline prices had caused them much or some hardship."

Assuras reports that more people are buying hybrid vehicles. Sales jumped 38 percent last year, while overall vehicle sales dropped three percent. Habits at home have changed as well.

"We just conserve energy," said Tory Brangham from Montclair, New Jersey. "We're more conscious about lights off; heat doesn't go over 62 in the winter."

In other Nymex trading, heating oil futures fell 0.04 cent to US$3.3110 a gallon while gasoline futures lost 0.29 cent to US$2.9762 a gallon. Natural gas futures were unchanged at US$10.733 per 1,000 cubic feet.

[cattlekate]

So when I was a young girl in the sixties, they taught us to just not resist, and not fight back when we got raped.

They said "Think about something pleasant and not resists, in order to survive."

We were taught to think about ocean waves and chirping birds.

For God''s sake, I feel that is that these oil-gouging apologists are doing.

I want to go back to the days where commodity traders had to take possession of what they were speculating on.

Thank goodness we will never go back to the days we were taught to not resist physical rape.

[homjett]

I just read the following this morning in another article concerning gas prices:

"In a press release dated April 24, 2006, Pelosi said, %u201CDemocrats have a commonsense plan to help bring down skyrocketing gas prices by cracking down on price gouging, rolling back the billions of dollars in taxpayer subsidies, tax breaks and royalty relief given to big oil and gas companies, and increasing production of alternative fuels.%u201D The letter cited policies put in place during the GOP control of Congress that the Speaker claimed had raised prices on American consumers to benefit oil companies. "
The GOP is now asking the Speaker to present that plan to help the consumer. Fat chance of that happening. Like I have said before, an folks should take note, things have really went down hill since the Demos took over Congress. To much time trying to find a reason to indict Karl Rove, so far nothing, an no time to solve our problems. This should be a wake up call for the Nov elections.

[ranger1948]

brianbwb
That was my experience in high school, however when i got to college i had professors that taught the truth about the history, not fiction. It was very interesting and informative. I hated high schol but loved my days in college.

[ranger1948]

element51
That is all th info i have right now. Have you checked the werbsite or called the number. I am inThailand so i am having my daughters fiancee check on it forme. I too want to know more about i.

[brianbwb-2009]

"Learning History requires reading and it was like pulling teeth to get one chapter covered."

My experience in history class, for example, was that we were told that we had to agree with, and repeat statements that were not factual, and this was the biggest reason we didn''t care. We were told that the "Indians" were "the bad guys", the slaves were freed, only to become more "bad guys", that Columbus discovered America, when the truth was that the Algonquin discovered some Europeans standing on the shore.

In science, the books were outdated and no longer accurate, there was a ridiculous but required propaganda class called "social studies", where passing or failing was determined on whether or not you agreed to a very right wing, almost fascist interpretation of US sociology.

It wasn''t that kids were dumb, it was more that school was so out of touch with reality as to be an irrelevant waste of time, and this was done purposely to "dumb down" the population, so that most would no longer understand the corruption that had taken over society.

[brianbwb-2009]

"Just the facts folks just the sad facts." Posted by perceptions5

A couple of sad facts left out are that we have had almost 100 years to figure out more efficient, cleaner, and cheaper methods of power generation and transportation, but progress in that area has been all but killed by those who think the present method is "good enough", whether because they profit from the status quo, or they have been brainwashed by those who profit from it.

"The day the gas runs out" is inevitable, and we have a choice, we can wait until the price of the dwindling supply triggers wars, famine, and general anarchy, or we can use the time left to develop and switch to alternatives.

Any rational person would choose the latter.

[michellem99-2009]

i guess I bore ye with my simple way of telling things..some one told me I am dumb. Really I think drivers need to send the message by not driving..But here is the problem there are other nations who want to do as the US does..We all have to pay our bills as if we don''t we would hurt us not the oil..I ''member in the 70s we talked about this friend and me..God help us if we ever mess with the middle east. Well our leaders had..Now look at us..Tt has stared, YEP. where will it end..Sure they could remake the car to earth friendly..Know why they wont..greed and money..yep..e 51..I read yer post..

[ranger1948]

mcharton4
India had an article a few weeksd ago about such a car they were building and it would run for 10 to 12 hours on one supply of air. It was on the news for a few days and disappeared. I wonder why (sarcasm) There is also a product on the market now you can go to a website called water4gas.com. They have a phone number of 818-720-0167. Supposed to cost about $40 and can work on cars and truckes, burns fuel cleaner and increases gas mileage up to 67%. If you want it installed the cost is said to be about $200. I am checking into it.

[mcharlton]

Here''s some consolation from oil prices. Automakers are working on a type of car that runs entirely on compressed air. Instead of using a controlled explosion, a burst of air forces the pistons downs. Here''s the cool part...The car runs for about 200 miles and you can fill up the car with a gas-powered air compressor for about $3.00. Since it takes about two hours to fill the tank, you may not want to drive cross-country with it. Gas/air hybrids would solve that problem with 600 miles between fill-ups.

I know it sounds like science fiction, but they''re already gaining popularity in Europe. GM and Ford are so desperate for profit that they''ll probably try anything. It could actually turn Detroit around.

[perceptions5]

This is exactly what happens when "special interest" groups influence our political leaders.

Environmentalists have been one the Democrats biggest donors for decades now.

They and their pals, the Democrats, have done an extremely great job of "stopping" all new "domestic" energy production in this country since the 1970''''s.

You know they hit us with "just conserve" as our country has grown from 200 million to 300 million.

The fact is because of this special interest group and their "enablers" the Democrats this country is now dependent on foreign sources of energy.

Now new oil drilling allowed

No new oil refineries allowed

No new nuclear power plants since the 1970''''s (France has built 60 since we built our last one in the 70''''s)

Now in Maryland the environmentialists has won a battle to block any "wind farms". They will kill bats and birds, of course.

So the American people if they are upset about energy prices then THANK those that are truely responsible.

THANKS TO THE DEMOCRAT PARTY

THANKS TO THE DEMS PALS THE ENVIRONMENTALIST

Just the facts folks..................just the sad facts.