Oil drops, but Nigeria checks fall

TOKYO – Oil futures slipped yesterday in modest profit taking from a surge late last week on jitters over Nigerian output, but losses were checked by refinery outages and signs that Opec’s supply cuts were helping drain stockpiles.

Front-month US crude was down 26 cents at US$59,13 a barrel on the Globex electronic trading platform, after falling to as low as US$58,87. London Brent crude was trading down 10 cents at US$58,85 a barrel.Traders said activity was likely to be muted as the New York floor was closed yesterday due to the Presidents Day holiday.Electronic trading continued as normal on Globex.Prices surged US$1,40, or 2,4 per cent, on Friday after the United States warned that militants from Nigeria’s oil-producing delta plan to expand their attacks on foreign nationals beyond the Niger Delta region.Violence in the delta over the past year has already cut output from Africa’s top producer by a fifth, and analysts fear it may escalate ahead of presidential elections in April.Security sources said yesterday that three Croatian workers had been kidnapped in the oil city of Port Harcourt, raising to nine the number of foreigners held by different armed groups.North American refinery outages lent added support.A crude unit at Imperial Oil Ltd.’s 118 000 barrel per day (bpd) Nanticoke, Ontario, refinery was hit by a fire on Thursday, while Valero Energy Corp.shut down its 158 000 bpd McKee refinery in Sunray, Texas, on Friday after a fire broke out.For the past two and a half weeks, oil prices have bounced around a narrow trading band of about US$57 to US$60 a barrel, a level that appears to satisfy many members of Opec ahead of their next scheduled meeting on March 15 in Vienna.Iranian Oil Minister Kazem Vaziri-Hamaneh said on Saturday he did not expect another Opec output cut if crude prices continued to rise, backing up other ministers who say the group’s pledged 1,7 million barrel per day cuts are doing the trick.”I think there is a consensus that output will be unchanged,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd.in Tokyo.”The cartel’s output cuts had some impact and resulted in reduced imports in the United States.”US crude oil inventories fell by 3,7 million barrels last week and now stand 1,5 per cent below year-ago levels, with many analysts expecting another big drawdown this week.Weekly US government stock data would be released a day later than usual due to the Presidents Day holiday.Despite current chilly US weather conditions that have lifted demand for heating oil, many analysts are already looking beyond winter toward the weaker spring season, when demand ebbs.Nampa-ReutersLondon Brent crude was trading down 10 cents at US$58,85 a barrel.Traders said activity was likely to be muted as the New York floor was closed yesterday due to the Presidents Day holiday.Electronic trading continued as normal on Globex.Prices surged US$1,40, or 2,4 per cent, on Friday after the United States warned that militants from Nigeria’s oil-producing delta plan to expand their attacks on foreign nationals beyond the Niger Delta region.Violence in the delta over the past year has already cut output from Africa’s top producer by a fifth, and analysts fear it may escalate ahead of presidential elections in April.Security sources said yesterday that three Croatian workers had been kidnapped in the oil city of Port Harcourt, raising to nine the number of foreigners held by different armed groups.North American refinery outages lent added support.A crude unit at Imperial Oil Ltd.’s 118 000 barrel per day (bpd) Nanticoke, Ontario, refinery was hit by a fire on Thursday, while Valero Energy Corp.shut down its 158 000 bpd McKee refinery in Sunray, Texas, on Friday after a fire broke out.For the past two and a half weeks, oil prices have bounced around a narrow trading band of about US$57 to US$60 a barrel, a level that appears to satisfy many members of Opec ahead of their next scheduled meeting on March 15 in Vienna.Iranian Oil Minister Kazem Vaziri-Hamaneh said on Saturday he did not expect another Opec output cut if crude prices continued to rise, backing up other ministers who say the group’s pledged 1,7 million barrel per day cuts are doing the trick.”I think there is a consensus that output will be unchanged,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd.in Tokyo.”The cartel’s output cuts had some impact and resulted in reduced imports in the United States.”US crude oil inventories fell by 3,7 million barrels last week and now stand 1,5 per cent below year-ago levels, with many analysts expecting another big drawdown this week.Weekly US government stock data would be released a day later than usual due to the Presidents Day holiday.Despite current chilly US weather conditions that have lifted demand for heating oil, many analysts are already looking beyond winter toward the weaker spring season, when demand ebbs.Nampa-Reuters