Oil rose to a record above $125 and was set for the biggest weekly gain in more than a year on speculation reduced exports from Nigeria will curb US supplies during the peak summer driving season.
Nigeria production, which fell to the lowest level in a decade in April, has been cut further this month by rebel assaults on Royal Dutch Shell Plc pipelines. OPEC said yesterday it doesn't need to increase supplies, even as its president warned prices may reach $200 a barrel.
"In the last couple of weeks attacks in Nigeria have been getting worse," said Andy Sommer, an analyst with HSH Nordbank in Hamburg. "Also, the view that oil can go to $200, even though everyone knows it's not the base-case scenario, is bringing in investor flows."
Crude oil for June delivery climbed as much as $2.29, or 1.9 per cent, to $125.98 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $125.17 at 1.32pm. Oil has risen 7.6 per cent this week, the biggest weekly gain since March 23rd, 2007. Prices have doubled in the last year.
Brent crude oil for June settlement jumped as much as $2.84, or 2.3 per cent, to a record $125.68 a barrel on London's ICE Futures Europe exchange. It was at $124.59 at 1.33pm.
Gasoil futures, the benchmark for diesel fuel, also rose to a record $1,187 a metric ton in London, gaining 2.9 per cent.
Shell's Nigerian output, cut by 164,000 barrels a day, may take as long as two weeks to return, a government official said yesterday. Nigerian production was 1.88 million barrels a day in April, down from 2.04 million in March, according to Bloomberg estimates.
Bloomberg