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02 December 2023

Oil climbs above $92 on Venezuela threat

By Agencies


Oil rose on Monday, extending last week's late gains, as Venezuela threatened to halt oil exports to the United States and bomb alerts shut down one of Britain's largest gas fields.

US light crude for March delivery rose 25 cents to $92.02 a barrel by 0512 GMT, partially eroding earlier gains. It had risen as high as $92.71 a barrel in early trade, matching its recent January 30 peak, the highest point since January 15.

London Brent rose 35 cents to $92.29.

Oil prices soared 4 per cent on Friday, their biggest gain in nearly two months as production problems in the North Sea and Nigeria pushed aside fears that a US recession would hurt fuel demand in the world's top consumer.

"Prices have eased a little since this morning because nothing new has happened to change the fundamentals," said Gerard Burg, a resource analyst at the National Bank of Australia, adding there may also have been some profit taking when prices neared $93.

"As for threats from Venezuela, there are some concerns but I think the market is of the view that Chavez's comments were deliberately inflammatory and it's not a serious supply risk."

Venezuelan President Hugo Chavez on Sunday threatened to stop sending oil to the United States after Exxon Mobil froze $12 billion of Venezuela's overseas oil assets to step up its push for compensation from a nationalised oil project.

"If you freeze us, if you really manage to freeze us, if you damage us, then we will hurt you. Do you know how? We are not going to send oil to the United States, Mr. Bush, Mr. Danger," Chavez said on his weekly TV show.

Chavez has frequently issued conditional threats to stop shipments to its biggest oil customer, but has maintained supplies despite repeated clashes with Washington.

News of a bomb threat forcing the shutdown of a major gas field in Britain over the weekend has also supported prices.

Britannia Operator Ltd, which operates one of Britain's biggest gas fields, shut down production and evacuated more than 160 workers from a North Sea platform on Sunday after a suspicious object sparked a full-scale security alert.

The operator later said a thorough search has "revealed nothing suspicious" and it was planning to restart its field as soon as possible. The field has a daily production of 14.35 million cubic metres.

In Nigeria, Royal Dutch Shell said it had halted 130,000 barrels per day of output and declared force majeure on Bonny Light shipments because of pipeline leaks.

Dealers said the rebound in prices from last Thursday's low of $86.24 -- near its lowest in three and a half months -- was aided by traders buying back short positions built up as the market fell from its January 3 record high of $100.09 a barrel.

Ahead of Friday's rebound, crude speculators on the New York Mercantile Exchange cut net long positions to 27,448 in the week ending February 5 from 29,845 in the previous weeks, Commodity Futures Trading Commission data showed on Friday. (Reuters)