04-10-04

Crude oil, which closed above $ 50 a barrel for the first time in New York, fell as concerns eased that Nigerian rebels may disrupt exports from Africa's biggest oil producer.

Rebel leader Mujahid Dokubo-Asari and Nigerian President Olusegun Obasanjo agreed to a cease-fire to discuss autonomy for the oil-rich Niger Delta. The rebels had threatened to attack oil fields in Nigeria, the fifth-largest supplier to the US, and producers including Shell evacuated personnel.

"In light of the cease-fire, I would expect prices to fall this week," said Craig Pennington, head energy analyst at Schroders in London. "It's a very tense situation still, but in the horizon I can't see any other supply disruptions."

Crude oil for November delivery dropped 47 cents, or 0.9 %, to $ 49.65 a barrel in electronic trading on the New York Mercantile Exchange. November Brent crude dropped 42 cents to $ 46.20 on London's International Petroleum Exchange.

New York crude rose 2.5 % to $ 50.12 a barrel, the highest closing price since trading began in 1983. It has risen 63 % from a year ago, gaining in 11 of the past 13 days, partly because Hurricane Ivan left output in the Gulf of Mexico 29 % lower, according to a government report. Ivan swept through the area last month.

"The pressure in Nigeria seems to be slightly relaxed," said Christopher Bellew, a broker at Prudential Bache International in London. "Nothing has deteriorated in Nigeria over the weekend."

Asari agreed a cease-fire with Obasanjo on Sept. 29 while the two sides held talks. The Niger Delta People's Volunteer Force had pledged all-out war, including attacks on oil installations, starting Oct. 1.
"We have no problem with the oil companies as long as the federal government meets our demands," Asari was quoted as saying on his return to Port Harcourt from Nigeria's capital, Abuja, on Oct. 2. Asari's force and the rival Niger Delta Vigilantes have agreed to end hostilities and disarm, a Nigerian government statement was saying.

Shell,Europe's second-largest oil and gas producer, is closely monitoring the situation after evacuating 308 non-essential staff in the Soku and Ekulama areas, said Lisa Givert, a company spokeswoman.
"Staff haven't yet returned, 30,000 bpd of output from the Santa Barbara and Kakrama oil flow stations is still shut in," Givert said.

Shell hasn't been able to get staff into the East Niger Delta to fix technical problems that caused the two facilities to shut because of security concerns, Givert said. Shell produces more than 1 mm bpd of oil in Nigeria.

Source: Bloomberg