Oil holds steady as supply fears plague markets

Oil holds steady as supply fears plague markets

Paris (Platts)--8Oct2004


World crude benchmarks held close to Thursday's record highs Friday as traders
worried about possible winter fuel shortages in the US and supply disruptions
stemming from labor disputes in OPEC member Nigeria and Norway. Reports that
bad weather was hampering crude discharging at the Louisiana Offshore Oil port
as well as ongoing disruptions to supplies from the Gulf of Mexico were also a
major cause for concern. November crude futures on the New York Mercantile
Exchange stood 12 cts lower at $52.55/bbl at 1430 GMT after trading as low as
$51.85/bbl in the Access session, while front month November Brent futures
were 10 cts higher at $49.00/bbl at the same time, having risen from an
intra-day low of $48.18/bbl. Traders are still concerned about stock levels
for winter fuels in the US after the DOE Wednesday said heating oil stocks had
fallen by around 1.2-mil bbl last week. "The market is becoming much more
pre-occupied with the middle distillates," an IPE trader said.

Nigerian oil unions officials said a decision to either halt or continue a
two-day warning strike at Shell Petroleum Development Company would be taken
after a "review meeting" later in the day. A company spokesman for SPDC's
Lagos headquarters earlier Friday said the strike was still on, although the
company's oil production and exports have not so far been affected. Workers
belonging to the white-collar union Pengassan and the blue-collar counterpart
Nupeng launched their action to protest Shell's planned re-organization
program, which has triggered fears of widespread job losses at the
5,000-strong company. At the same time, the government continued to engage the
country's labor movement in talks aimed at averting a separate nationwide
strike in protest at rising domestic fuel prices planned for Monday. Striking
Norwegian rig workers, meanwhile, said they planned to go ahead Saturday with
an announced escalation of the three-month old dispute with their employers
which has put half of Norway's mobile drilling rigs out of action.

From midnight Friday, the Petrojarl Varg floating production vessel at the
Varg field, operated by PGS subsidiary Pertra, will strike, adding another
25,000 b/d from Monday to the 30,000 b/d of production already affected by the
dispute. A Gulf source, meanwhile, told Platts Thursday that there was "no
reason whatsoever" for the surge that has taken oil prices to unprecedented
levels, markets being well supplied with crude and global commercial
inventories having risen above last year's levels. He said Saudi Arabia and
OPEC would not allow a shortage of crude to develop and that Riyadh was ready
to bring on its full crude output capacity if the market demanded it.

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