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Middle East war and Ukraine-Russia dispute push oil prices up
Source: Agencies |
January 6, 2009, Tuesday
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ISRAEL'S ground offensive in Gaza and a dispute between Ukraine and Russia over gas imports pushed oil prices above US$48 a barrel yesterday, but some analysts say there is more than just unrest in the Middle East behind the rally.
Light, sweet crude for February delivery rose US$2.47 cents to settle at US$48.81 a barrel on the New York Mercantile Exchange.
Israel seized control of high-rise buildings and attacked houses, mosques and smuggling tunnels as it pressed its offensive against the Gaza Strip's Hamas rulers, while the US joined a number of countries calling for a cease-fire.
Energy consultancy Cameron Hanover said some traders like to point to violence in the Middle East as a cause of higher oil prices, but the reality is slightly different.
"Any time that prices react by moving higher, in response to violence in the Middle East, particularly in non-oil producing countries like Israel or the Palestinian territories next door, it is a good sign that the market wants to move higher," the firm said in its Daily Energy Hedger report.
Phil Flynn, an analyst at Alaron Trading Corp in Chicago, said there seems to be a mood change in the market and a belief that the economic doom and gloom has hit bottom.
"Would we really be concerned about these geopolitical issues as it relates to oil if we didn't think that the demand was going to improve somewhat in the coming year? Probably not," Flynn said.
An Iranian Revolutionary Guard commander on yesterday urged Islamic nations to use crude oil as a weapon to exert pressure on Western backers of Israel. But many analysts doubt that will happen, because oil-producing nations - including Iran - would harm themselves by cutting off petroleum supplies.
"An oil embargo is just bad for business," said Serene Gardiner, oil products analyst at Standard Chartered Bank in Dubai.
Meanwhile Russian gas monopoly Gazprom has cut off gas shipments to Ukraine since Thursday in a dispute over payments, and Ukraine warned that European customers could see serious natural gas disruptions in about two weeks.
Gazprom has continued to send gas to Europe, which relies on it for a quarter of its gas. But 80 percent of the gas Gazprom sends west passes through the same pipelines that supply Ukraine, and over the past four days the pressure in the pipelines has dropped. Some European countries - including Bulgaria, the Czech Republic, Hungary, Poland and Romania - have reported a decline in supplies.
Analysts at JBC Energy in Vienna, Austria, said in a research note that oil prices were supported by "increasing evidence that OPEC is adhering to its agreed production cuts and the announcement of the US government to add more oil into its strategic reserves."
Iran's state television said OPEC countries have decided to hold an extraordinary meeting on falling oil prices in Kuwait in February. The report on yesterday quoted Iran's OPEC governor Mohammad Ali Khatibi as saying the organization planned to bring forward the regular meeting in March because the "trend of oil prices" calls for holding a meeting a month earlier.
But a Kuwaiti official told Platts that there are no plans for Kuwait to host such a meeting, and OPEC ministers will likely wait to gather at their scheduled meeting in Vienna on March 15.
In London, February Brent crude rose US$2.71 cents to settle at US$49.62 a barrel on the ICE Futures exchange.
In other Nymex trading, gasoline futures added 7.19 cents to settle at US$1.1824 a gallon. Heating oil gained 9.6 cents to settle at US$1.5763 a gallon while natural gas for February delivery rose 10.1 cents to settle at US$6.072 per 1,000 cubic feet.
Light, sweet crude for February delivery rose US$2.47 cents to settle at US$48.81 a barrel on the New York Mercantile Exchange.
Israel seized control of high-rise buildings and attacked houses, mosques and smuggling tunnels as it pressed its offensive against the Gaza Strip's Hamas rulers, while the US joined a number of countries calling for a cease-fire.
Energy consultancy Cameron Hanover said some traders like to point to violence in the Middle East as a cause of higher oil prices, but the reality is slightly different.
"Any time that prices react by moving higher, in response to violence in the Middle East, particularly in non-oil producing countries like Israel or the Palestinian territories next door, it is a good sign that the market wants to move higher," the firm said in its Daily Energy Hedger report.
Phil Flynn, an analyst at Alaron Trading Corp in Chicago, said there seems to be a mood change in the market and a belief that the economic doom and gloom has hit bottom.
"Would we really be concerned about these geopolitical issues as it relates to oil if we didn't think that the demand was going to improve somewhat in the coming year? Probably not," Flynn said.
An Iranian Revolutionary Guard commander on yesterday urged Islamic nations to use crude oil as a weapon to exert pressure on Western backers of Israel. But many analysts doubt that will happen, because oil-producing nations - including Iran - would harm themselves by cutting off petroleum supplies.
"An oil embargo is just bad for business," said Serene Gardiner, oil products analyst at Standard Chartered Bank in Dubai.
Meanwhile Russian gas monopoly Gazprom has cut off gas shipments to Ukraine since Thursday in a dispute over payments, and Ukraine warned that European customers could see serious natural gas disruptions in about two weeks.
Gazprom has continued to send gas to Europe, which relies on it for a quarter of its gas. But 80 percent of the gas Gazprom sends west passes through the same pipelines that supply Ukraine, and over the past four days the pressure in the pipelines has dropped. Some European countries - including Bulgaria, the Czech Republic, Hungary, Poland and Romania - have reported a decline in supplies.
Analysts at JBC Energy in Vienna, Austria, said in a research note that oil prices were supported by "increasing evidence that OPEC is adhering to its agreed production cuts and the announcement of the US government to add more oil into its strategic reserves."
Iran's state television said OPEC countries have decided to hold an extraordinary meeting on falling oil prices in Kuwait in February. The report on yesterday quoted Iran's OPEC governor Mohammad Ali Khatibi as saying the organization planned to bring forward the regular meeting in March because the "trend of oil prices" calls for holding a meeting a month earlier.
But a Kuwaiti official told Platts that there are no plans for Kuwait to host such a meeting, and OPEC ministers will likely wait to gather at their scheduled meeting in Vienna on March 15.
In London, February Brent crude rose US$2.71 cents to settle at US$49.62 a barrel on the ICE Futures exchange.
In other Nymex trading, gasoline futures added 7.19 cents to settle at US$1.1824 a gallon. Heating oil gained 9.6 cents to settle at US$1.5763 a gallon while natural gas for February delivery rose 10.1 cents to settle at US$6.072 per 1,000 cubic feet.
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