NEWS & EVENTS: Breaking News
29.06.2009 08:01
June 29. In global petroleum market headlines, oil prices fell more than USD 1 to settle below USD 70 on Friday on the back of a sell-off on Wall Street and news top African oil producer Nigeria would halt a battle with rebels in its energy-rich Niger Delta. US light, sweet crude dipped USD 1.07 to settle at USD 69.16 a barrel. London Brent crude also edged lower. The losses came as US equities markets were hit by a bout of profit-taking. Oil has moved in tandem with stocks for months as energy dealers look to equities for guidance on the economic outlook and its implications for ailing world oil demand. Adding to oil's losses Friday was news that Nigerian security forces said they would observe a 60-day ceasefire in the Niger Delta under a federal amnesty program that four rebel factions said on Friday they might be willing to take part in. Oil prices had risen sharply earlier, after the Movement for the Emancipation of the Niger Delta said it attacked the wellhead in Nigeria's Afremo oil field late on Thursday. Pipeline bombings, attacks on oil and gas installations and the kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two-thirds of its installed oil output capacity of 3 mn bpd. President Umaru Yar'Adua on Thursday offered a presidential pardon to gunmen in the Niger Delta from August 6 to October 4 in a bid to end years of unrest that have cost the OPEC member billions of dollars in lost revenue. Shell said it was investigating reports of an attack on its Afremo platform B facility, which had been shut down following an attack on the Trans Escravos pipeline in February. Oil’s losses on Friday profit-taking came in line with our prediction and we believe this speculative trend is attributable to the Fed’s guidance that the struggling economy would hold back inflation this year. This outlook is dollar-positive and a negative for crude. Going forward, we believe oil prices could rise to as high as USD 75-80 this year, but there is also a downside risk as low as USD 60, the bottom of OPEC’s comfort range, which could reflect investors’ disillusionment over the pace of the economic recovery.
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