Oil Prices Rise Above $67 Amid Iran Tension

Friday, January 20th 2006, 10:42 am
By: News On 6

SINGAPORE (AP) _ Crude oil prices rose Friday amid concern over the Iranian nuclear dispute, unrest in Nigeria and new threats of attacks on the United States by al-Qaida.

Worries of possible sanctions against Iran, OPEC's second-largest producer, over its nuclear program and violence in oil-rich Nigeria have helped support oil prices _ so much so that even a report of growing supplies in the U.S. did not calm the market.

Light, sweet crude for February delivery rose 54 cents to $67.35 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe.

Brent crude for March delivery reached a three-month high of $66.02 a barrel Friday before easing back a bit. By afternoon it was at $65.85 a barrel on London's ICE Futures exchange, up 62 cents.

Heating oil rose more than 3 cents to $1.8300 a gallon, while gasoline gained more than 2 cents to $1.7990 a gallon. Natural gas advanced 25 cents to $9.160 per 1,000 cubic feet.

International pressure is mounting on Tehran to turn away from resuming uranium enrichment, which it claims is for energy. The United States and key European nations, which fear Iran wants to make weapons, have pushed for a referral of the issue to the U.N. Security Council. Iran insists its plans for enrichment are only to produce nuclear energy.

On Friday, the central bank governor said Iran is moving its foreign currency reserves out of European banks as a pre-emptive measure against any possible U.N. sanctions over its nuclear program.

Ebrahim Sheibani told reporters that Iran has started transferring the foreign currency reserves from European banks to an undisclosed location, the semiofficial Iranian Students News Agency reported.

On Thursday, Royal Dutch Shell PLC confirmed the death of a second catering contractor in an attack by armed militants on an oil platform in southern Nigeria, raising the death toll to 14.

The series of attacks, including the rupture of a major Shell pipeline in the region, has forced the oil giant to evacuate more than 300 workers from four installations deemed vulnerable to attacks. The company cut production by 221,000 barrels a day as a result.

``Events in Nigeria appear to represent a significant and dangerous break from previous events, although we still see Iran as representing the major political risk to oil prices this year,'' said Barclays Capital.

Adding to the market jitters was an audiotape in which Osama bin Laden warned that his fighters are preparing new attacks in the United States. The tape, portions of which aired Thursday on Al-Jazeera television, was the first from the al-Qaida leader in more than a year.

The worries overcame a strong inventory report from the United States, the world's largest energy consumer.

The U.S. Energy Department report this week showed domestic crude-oil inventories grew by 2.7 million barrels last week to 321.4 million barrels, or 12 percent above year ago levels.

Gasoline inventories expanded by 2.8 million barrels to 211.6 million barrels, or 3 percent below year ago levels. The supply of distillate, which includes heating oil and diesel, increased by 900,000 barrels to 134.7 million barrels, or 8 percent above last year.

Meanwhile, the Organization of Petroleum Exporting Countries forecast Friday that second-quarter demand will remain unchanged at 83.57 million barrels a day. For all of 2006, OPEC has lowered its estimate for world oil demand by 100,000 barrels a day to 84.83 million barrels a day.