Oil prices advance above 133 dollars
Wednesday, 28 May 2008

Agency

Oil prices rose above 133 dollars a barrel on Tuesday, within reach of last week's record peaks amid violence in key African crude exporter Nigeria, dealers said.

New York's main oil futures contract, light sweet crude for July delivery, advanced 1.07 dollars to 133.26 dollars a barrel.

Brent North Sea crude for July delivery climbed 40 cents to 132.77 dollars a barrel.

Last Thursday, Brent had struck an all-time high of 135.14 dollars and New York crude reached a record 135.09 dollars, before both contracts slid as investors banked profits.

"Oil futures were a little firmer (on Tuesday), still supported by news of an oil pipeline attack in the Niger Delta yesterday," said Sucden analyst Andrey Kryuchenkov.

"In addition, the dollar remains weak, also underpinning the market along with persistent fears that demand is going to outpace supply in the long run."

A Nigerian militant group said it had attacked an oil pipeline run by Royal Dutch Shell on Monday and killed 11 soldiers in the main producing region of Africa's biggest oil exporter.

The raid by the Movement for the Emancipation of Niger Delta (MEND), one of the main separatist groups in the region, came four days after the army said it had thwarted an attack on another Shell facility in the strategic region.

Nigeria is officially the world's eighth-largest oil exporter but over the past two years its production has been cut by a quarter to about 2.1 million barrels a day because of the insurgent attacks.

World oil prices have risen more than fourfold in the last five years, underpinned by Chinese demand for crude.

They reached 100 dollars for the first time in January, crossed 120 dollars a barrel at the start of May, and 130 dollars last Wednesday after US government data showed that American energy reserves surprisingly fell.

Prices are also being supported by unrest in oil-producing countries, OPEC's unwillingness to hike output, and a weak dollar which makes commodities priced in the US unit cheaper for foreign buyers.

OPEC, which produces 40 percent of the world's oil, is reluctant to bend to US-led demands for it to pump more crude to help cool rocketing prices.

The 13-nation cartel insists that the market is well supplied and that record prices reflect speculative investment activity rather than actual supply and demand conditions.

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