Oil Prices Approach $120 Per Barrel

(AP)  Oil prices hit an all-time high near $120 a barrel Monday after a weekend refinery strike closed a pipeline system that delivers a third of Britain's North Sea oil to refineries in the U.K.

The shutdown comes amid supply outages in Nigeria that have helped to support oil against a strengthening dollar.

"We've got a confluence of a number of events that have really disrupted crude oil supply," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "That's what's driving oil to a new record even though the U.S. dollar actually strengthened a bit."

Light, sweet crude for June delivery rose to a record $119.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract eased back to $119.04 a barrel by noon in Europe, up 52 cents from Friday's close of $118.52.

BP PLC on Sunday shut down the Forties Pipeline System that carries more than 700,000 barrels of oil a day to the U.K. because of a 48-hour walkout by employees at a refinery in central Scotland.

Workers walked out of the Grangemouth refinery vowing not to give ground in their dispute with refinery owner Ineos over plans to close a generous pension scheme to new employees. Ineos chief executive Tom Crotty said it could take a week for the plant to return to production once the strike ends on Tuesday. BP said its pipeline could be up and running within 24 hours.

BP's Kinneil plant, the onshore processing center for the pipeline system, is powered from the Grangemouth site.

"With the refinery being shut down, it will affect supplies from the North Sea and that has a potentially significant impact," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney. "That comes at the same time that there's production disruptions from Nigeria so the combined effect of those is the immediate factor that's put pressure on oil prices."

Analyst Stephen Schork also attributed the bullish market to the combination of events stoking supply concerns.

"News that BP shut-in 40 percent of the Forties Pipe compounded the latest headline out of Nigeria regarding a rebel attack near that country's largest oil and gas export terminal on Bonny Island," he said, in his Schork Report. "Thus, all of that 'bubble talk' aside, the market looks stronger than ever."

In Nigeria, the Movement for the Emancipation of the Niger Delta, or MEND, said its fighters hit an oil pipeline late Thursday, the fourth conduit the group has attacked in the past week. MEND said the pipeline belongs to a Royal Dutch Shell PLC joint venture. A Shell spokesman confirmed one of its pipelines had been hit, but provided no additional details.

Separately, workers at an ExxonMobil Corp. joint venture there cut production by an unspecified amount to demand more pay.

Demand is high for Nigeria's light, sweet crude, which is easily refined. After years of militant attacks, however, Nigeria's output is dropping and the country can produce only about 75 percent of its official production capacity of 2.5 million barrels per day.

This week, the oil market is also expected to closely watch the outcome of the U.S. Federal Reserve's policy meeting on Tuesday and Wednesday.

The central bank's policymakers will meet to decide whether to lower interest rates again and to issue an updated assessment of the U.S. economy and financial system. Most investors believe the Fed will lower rates by another quarter percentage point - and that it will also suggest it may temporarily halt its round of recent cuts.

"There are a lot of expectations that the Fed will make an announcement that they will take a pause in interest rate cuts," Shum said. "If that's the case, then the U.S. dollar may bottom out and that could cause some pullback in oil pricing."

Many analysts believe the weakness of the dollar is a bigger factor than supply and demand because the soft dollar draws investors worried about inflation into commodities such as oil and gold. It also makes commodities less expensive for buyers operating in other currencies.

In other Nymex trading, heating oil futures were flat at $3.310 a gallon while gasoline prices moved up slightly to fetch $3.0568 a gallon. Natural gas futures added over 10 cents to sell at $11.072 per 1,000 cubic feet.

Brent crude futures rose 73 cents to $117.07 a barrel on the ICE Futures exchange in London.

[michellem99-2009]

element51
I am trying to figgar that out. Politacs does play a role dear..I am 53. I don''t drive. I am legally blind. Do ye ''member in 73 where they could not buy gas.There were long lings at the pump. I don''t. I walked around in the small town in Maine and bussed to high school. There were students that were allowed to drive and park at school. They were seniors and only seniors. I grad 74. We talked about it then. We talked about this as a class. God help us if we ever go to war with the middle east and now we are seeing it.

[pentangyl]

If we had a people''s Congress, there would be stability. The greatest crime of Congress is its currency system. The worst legislative crime of the ages is perpetrated by this banking bill. Woodrow Wilson signed the Federal Reserve Act on December 23, 1913. History proved that on that day, the Constitution ceased to be the governing covenant of the American people, and our liberties were handed over to a small group of international bankers. The caucus and the party bosses have again operated and prevented the people from getting the benefit of their own government."

[grvmstrj]

THIS IS ALL A MANIPULATED PATH. OUR GOVERNMENT (LOVELY CONSERVATIVES) ARE AS MUCH TO BLAME AS ANYONE OR ANY GOVERNMENT. IT IS EMBARRASING TO WITNESS WHAT WE HAVE ALLOWED OUR COUNTRY TO BE TURNED INTO AND AT THE IDENTICAL TIME LOOK AT WHAT THIS REGIME HAS DONE TO THE AMERICAN IMAGE. GOOD LUCK TO ALL OF YOU RICH FOLK. WHEN YOU GO AWAY FROM THIS COUNTRY FOR LEISURE-DON''T WALK AROND THE WRONG CORNER YOU WILL BE HISTORY!

[venkata4--2008]

"Nationalize the stinking oil companies and their vast resources now. They''ve had their vampire fangs stuck in our necks and weallets long enough. Fuel is not a luxury it''s a necessity and it''s time we stopped making trillionaires out of these liars and made them go out and get real jobs.

Posted by talkingham at 10:27 AM : Apr 28, 2008"

Our Prez. say over my dead body. Anyway voting oil men as Prez. & VP is a big mistake. Voting them for second time produces this result. So we eat what we cook.

[venkata4--2008]

Prez. & VP wiil be laughing all the way to banks when they retire this year end. Look how fat their nest eggs have grown.

[mediapreachr]

Posted by talkingham at 10:27 AM : Apr 28, 2008
We(the USA)will nationalize the energy resources-it''s common sense.The corrupt business syndicate knows that and they''re in a race against the clock to get every dollar left.

[bgwinnett]

We need to start drilling in Alaska and off the Californian Coast NOW!!! plus start exploration in the Falkland Isles to see how much oil is under the seas around the Islands.
This is no panacea though only a short term fix -- In the longer term we need to start ramping up the extraction of bitumen from the Alberta tar sands and the mining of the Colorado Oil shale.Unbelievably the Canadian Government are removing some oil sands tax incentives over coming years, because of heavy environmental pressure.

[killtheliars]

to those who do not think this situation is being manipulted by big oil consider this. Before GW invaded Iraq gas was $140.00 per gallon. Big Oil was crying that is Saddam kept flooding China, Russia and India with cheap crude the cost per gallon might drop below $1.00 and would therefore hurt profits, which would in turn hurt the U.S. economy. Then cheney had his closed door energy meeting.
Next thing you know we invade Iraq, and kill Saddam. Insread of leaving we stay yet no signifigant oil is leaving Iraq to add to the global supply.
THere are a few reasons many would want to drive up the prince of oil. The reason big oil wants high prices are odvious, profits. THe politicians would want high oil for a few reasons. The neo-cons are all about open markets and no rules. Allowing south america into NAFTA is what they desire. high oil pices have allowed Chavez (who seems to be an enemy of the adminiatration, but may actually be working with them) to pay off much of south america''s debt making their inclusion into NAFTA simpler, since the payment of outstanding debts won''t be an issue.The other reason is the middle east. high profits keep the saudi princes happy. It also means if a pipeline can be run from N. Iraq to Israeli ports Israel will finally have a steady source of income and will not have to rely so heavily on U.S. financial aid. My oponion is South America, Israel and the security of the middle East are not my problem.

[naucoming4u]

I''''m not looking for political rhetoric, just information.

Posted by Element51 at 10:42 AM : Apr 28, 2008
............

LOL!

That''s nearly impossible on these comment boards!

[naucoming4u]

That''s Cheney''s hand in the picture by the way.