Oil prices ease, above 125 dollars
World oil prices ease but remain above $125 after an inflow of investment funds and supply worries helped push costs to another record high.Updated: May 12, 2008 09:22 IST
World oil prices eased but remained above $125 on Monday after an inflow of investment funds and supply worries helped push costs to another record high, analysts said.
New York's main oil futures contract, light sweet crude for June delivery, was 56 cents lower at $125.40 a barrel.
The benchmark contract closed on Friday at $125.96 after spiking to a record $126.25 in intraday trading at the New York Mercantile Exchange.
Brent North Sea crude for June was 61 cents lower at $124.79 a barrel after briefly hitting an all-time peak of 125.90 dollars in London on Friday before settling at $125.40.
World oil prices crashed through records every day last week and have rocketed 25 per cent since the start of the year, when they broke the 100-dollar barrier.
Analysts cite a variety of factors for the price spikes, including rising energy demand from Asian powerhouse economies China and India, and a weak US dollar.
Unrest and militant attacks targeting oil company infrastructure in Nigeria, Africa's largest crude producer, have also pushed prices higher, analysts say.
Oil major Royal Dutch Shell said on Saturday it was losing the equivalent of 30,000 barrels of crude oil per day because of recent attacks against its installations in Nigeria.
"That's quite a big, significant impact, especially in the US, because the oil is quite good quality," said Tetsu Emori, a fund manager with Astmax asset management in Tokyo.
The Royal Dutch Shell loss translates to 409 million naira (3.47 million US dollars) in lost revenue every day, said Chidi Izuwah, a spokesman for the Shell Petroleum Production Company.
Anglo-Dutch oil group Shell, Nigeria's largest oil operator, accounts for around half the country's 2.1 million barrels per day output. An upsurge in attacks by militant groups on its facilities has forced it to cut back on production.
Emori and other analysts say an inflow of investment funds has also been a key factor behind the surge in oil prices.
Sucden analyst Michael Davies said there was "keen interest in the oil market by the (investment) funds, which are currently being attracted by oil's rapid price appreciation this year.
"This probably explains the move higher over the last few days," he said. Lehman Brothers analyst Edward Morse said another factor is "stockpiling in China to prevent shortages ahead of the Olympics" in Beijing from August 8-24.
Industry experts say China, which enjoys record-breaking economic growth, will need even more crude oil to provide the facilities, transportation and energy supplies that are required to power a successful Olympic Games.
The Organisation of the Petroleum Exporting Countries (OPEC) cartel last week insisted the oil market was well-supplied and driven by speculators rather than by underlying demand.
US President George W Bush is to visit OPEC's largest producer, Saudi Arabia, on Friday, and is to express US concerns about the dramatic rise in oil prices.