Oil prices were stable on Tuesday in Asia near last session’s peak close above $117 a barrel, supported by producers who were concerned about the instability in crude supplies.
Oil major Royal Dutch Shell PLC in Nigeria reported on Monday, that it may reduce deliveries of some 169,000 barrels a day in April and May due to rebels who attacked a pipeline last week in the country’s south.
Shell Petroleum Development Co. announced a force majeure that will be effective from April 22, on its April and May delivery contracts from its 400,000-barrel-a-day Bonny fields. This step will protect Shell from any legal actions if it fails to follow contractual obligations towards buyers.
Nigeria has been facing problems related to militancy and lawlessness, in its southern regions. Attacks on oil sites have become common.
According to Shum, “It is light, sweet crude, which is much desired by the U.S. market during the summer gasoline season, so that certainly has affected the market”.
Nigeria is one of the major oil exporters to the United States. Attacks on Nigerian oil pipelines have reduced nearly a quarter of the African country’s oil production.
There was a decrease of 5 cents in the light sweet crude for May delivery, as the prices settled to $117.43 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract rose to a record peak of $117.83 a barrel on Monday.
In the floor session, the prices increased by 79 cents to a record level of $117.48 a barrel. The May contract will expire at the end of trading, Tuesday.
Prices of crude oil increased on Monday after the 150,000 ton tanker Takayama was sabotaged, off the coast of Yemen en-route to Saudi Arabia.
According to Kyodo News agency the Japanese tanker was attacked by the rocket launcher from a small boat. However, all of the ship’s 23 crew members were safe, the company reported, but hundreds of gallons of fuel was wasted because of a 1-inch hole in tanker’s stern. That was repaired later on.
Other supply issues also influenced the oil market. In Mexico, oil production fell by 7.8 percent to reach 2.91 million barrels a day output in the first quarter, at the country’s traditional oil fields wanes, as reported by oil company Petroleos Mexicanos. In Scotland, there can be temporary setbacks in oil productions as the workers at Ineos PLC’s 196,000-barrel-aday Grangemouth refinery and petrochemical plant threaten to go on strike for 48 hours from April 27 because of changes in employee pension policies.