Oil Price Recovers, Hits Over $101 per barrel

2011-05-10
THISDAY Newspaper- Ejiofor Alike

Oil price Monday rose by over four per cent, rebounding 35 per cent from the figure a year ago after it dropped 15 per cent in the previous week in a biggest weekly loss since 2008.

Reuters reported that the previous week's record double-digit losses attracted bargain hunters.

According to reports, crude oil for June delivery rose $4.22, or 4.3 per cent, to $101.40 a barrel on the New York Mercantile Exchange.

Nigeria's 2011 budget is benchmarked at $75 per barrel.

Futures dropped 15 per cent in the five days ended May 6, the biggest weekly decline since December 2008.

Brent crude for June settlement increased $4.52, or 4.1 percent, to $113.65 a barrel on the London-based ICE Futures Europe exchange.

Bloomberg attributed the surge in oil price to a report that showed that German exports surged to a record in March and the expansion of the United States payrolls, according to US Labour Department.

German exports, adjusted for work days and seasonal changes, jumped 7.3 per cent from February, when they gained 2.8 per cent, the Federal Statistics Office in Wiesbaden said. Economists had forecast a 1.1 per cent increase, according to the median of 10 estimates in a Bloomberg News survey.

Exports were worth 98.3 billion euros ($141.4 billion) in March, the most since records began in 1950, the statistics office said.

United States payrolls expanded by 244,000 last month, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the Labour Department said May 6 in Washington.

Gasoline prices in the United States jumped the most in 19 months on speculation that rising water levels in the Mississippi River may threaten production at some refineries along the river.

The water has the potential to close oil operations in the New Orleans-to-Baton Rouge region, which has 11 refineries with a combined capacity of 2.5 million barrels a day, or 13 percent of US output, Bloomberg quoted President of Lipow Oil Associates LLC, Andy Lipow as saying in Houston.

The Mississippi, the largest U.S. river system, is forecast to crest today in Memphis, Tennessee, just below its 74-year-old record.

It was earlier predicted that volatility and uncertainty associated with the escalating Libyan conflict could further affect market forces and push up oil prices.

The conflict spilled beyond Libyan borders as forces loyal to leader Gaddafi reportedly attacked the Tunisian town of Dehiba, near the Libyan border.

Morocco, which borders Algeria, a major oil and gas producer and member of the Organisation of Petroleum Exporting Countries (OPEC), also alleged that a bomb that killed at least 14 people the previous week was a terrorist act.

Tensions escalated in Syria as thousands of protesters rallied across the country demanding political freedoms and these will potentially affect crude oil prices.

The crisis in Libya worsened after the country’s authorities confirmed that Gaddafi's youngest son and three grandchildren were killed in a NATO air strike.

The President of Venezuela, another major oil producer, President Hugo Chavez, called the attack attempted murder.

 

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