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14 July 2024

Oil prices fall on profit-taking

By Agencies


Oil prices dropped on Monday as traders banked recent large profits won on worries about tight supplies amid unrest in Nigeria – Africa's biggest crude producer – and cold US weather.


Analysts said the market was shrugging off a threat from Venezuela President Hugo Chavez to cut oil sales to the United States, saying it was likely to remain just a warning.


New York's main contract, light sweet crude for delivery in March, lost 32 cents to $91.45 a barrel.

Brent North Sea crude for March delivery slid 54 cents to $91.40.


"The markets are still tight, and although there has been constant pressure on oil prices amid concerns over slowing demand growth, geopolitical concerns still remain, which is causing increased volatility in the market," said Sucden analyst Nimit Khamar.


Oil prices had soared on Friday on supply disruptions in Nigeria and amid expectations of colder weather in key energy consumer the United States, traders said.


New York crude closed up $3.66 a barrel and Brent won $3.43.


Prices were driven higher by "news of crude oil disruptions," David Moore, a commodities strategist at the Commonwealth Bank of Australia, said on Monday.


Anglo-Dutch oil group Shell had said Thursday that it would not be able to honour all its export contracts from its southern Nigerian Bonny export terminal for the rest of February and March because of sabotage.

The company did not give figures on the expected loss in production but industry sources said it runs into thousands of barrels of crude.


Shell is Nigeria's largest oil operator, accounting for around half of the country's daily output of 2.6 million barrels at peak production, but unrest in the Niger Delta has slashed production by a quarter since January 2006.


Meanwhile in Venezuela – the biggest oil producer in Latin America – Chavez threatened to turn off the taps to the US should American energy group ExxonMobil succeed in claiming billions of dollars in Venezuelan assets as compensation for expropriated oil fields.


In his weekly radio and television show on Sunday, Chavez condemned the US oil giant "bandits" and "white-collar criminals" and said the clash with the company was "the tip of an iceberg that is economic war."


Venezuela, one of the world's top 10 oil producers, is the fourth largest supplier of foreign oil to the US, with daily exports of some 1.3 million barrels.


Analysts dismissed the latest threat made by Chavez, which comes after ExxonMobil, one of the world's four largest oil companies, won international court orders freezing up to $12 billion in assets of Venezuela's state oil firm Petroleos de Venezuela (PDVSA).


"I don't expect anything to come out of this in terms of actually cutting supplies to the US," said Societe Generale analyst Mike Wittner. (AFP)