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Monday, February 11, 2008 - Page updated at 09:57 PM

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Oil Prices Jump on Chavez Threat

Associated Press Writer

Oil prices retreated Tuesday after jumping almost $2 in the previous session on concerns about potential supply disruptions in Venezuela and Nigeria.

Crude futures were supported by Venezuelan President Hugo Chavez's threat Sunday to cut off oil sales to the U.S. in retaliation for court orders freezing assets belonging to Venezuela's state oil company, and by reports of new violence in Nigeria, Africa's largest oil producer and a major supplier to the U.S.

Light, sweet crude for March delivery lost 55 cents to $93.05 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. On Monday, the contract jumped $1.82 to settle at $93.59 a barrel.

"The oil price went up fairly sharply last night, and it's still at high levels by the standard of recent days and certainly well within the high end of the ranges we saw last night," said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney.

In Nigeria, unidentified gunmen Monday attacked a naval vessel that was escorting petroleum industry boats, killing one sailor and injuring another.

The attack is the latest incident to unnerve traders after Royal Dutch Shell PLC said last week that it would not be able to honor all its export contracts from the tumultuous Niger Delta region for two months due to sabotage of a pipeline. Approximately 130,000 barrels a day of production are believed to be shut-in as a result of the force majeure declared by the firm.

In Venezuela, Exxon Mobil Corp. has gone after Petroleos de Venezuela SA in U.S., British and Dutch courts, challenging the nationalization by Chavez's government of a multibillion dollar oil project. A British court last week issued an injunction freezing as much as $12 billion in Petroleos' assets.

"The combination of these factors creates some concerns about the supply side of the equation," Moore said.

Heating oil futures fell 0.54 cent to $2.599 a gallon while gasoline prices dropped 0.87 cent to $2.3875 a gallon.

Natural gas futures added 1.8 cents to $8.549 per 1,000 cubic feet.

In London, Brent crude lost 45 cents to $93.08 a barrel on the ICE Futures exchange.

Copyright © 2008 The Seattle Times Company

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