Oil prices shoot to record 117.60 dollars

3 hours ago

LONDON (AFP) — The price of New York crude oil shot to a record high 117.60 dollars on Monday as traders seized on unrest in key producer Nigeria, the weak US currency and OPEC's refusal to increase output.

Later Monday, New York's main oil futures contract, light sweet crude for delivery in May, pulled back to 116.53 dollars, down 16 cents from Friday's close.

London's Brent North Sea crude for June hit a record 114.86 dollars but then slipped back to 113.83 dollars, down nine cents.

Sucden analyst Nimit Khamar said the market was "supported by geopolitical concerns surrounding Nigeria and comments from OPEC, who over the weekend once again reiterated their reluctance to increase production."

Monday's record-breaking run beat the previous highs set on Friday as news emerged of another pipeline attack in Africa's biggest producer Nigeria.

The most prominent militant group in Nigeria's southern oil-producing region said it had sabotaged two pipelines, possibly belonging to Anglo-Dutch oil giant Shell and US peer Chevron.

An email sent to AFP early Monday said that "Commandos from the Movement for the Emancipation of the Niger Delta (MEND) in continuation of Operation Cyclone attacked two major oil pipelines in Rivers state of Nigeria.

"The pipelines may belong to Shell and Chevron," the message added.

It described Operation Cyclone as "the crippling of the Nigerian oil export industry."

There was no immediate confirmation from the companies named. The raids followed similar sabotage of a Shell pipeline on Thursday, when the group promised "many more" such attacks to follow.

Shell, Nigeria's largest oil operator accounting for around half of the country's 2.1 million barrels per day output, has seen a wave of attacks on its facilities in recent months.

Also over the weekend, OPEC president and Algerian Oil Minister Chakib Khelil said that there was no need for an immediate hike in production.

He said the cartel, which produces around 40 percent of the world's oil, "does not need to raise output in the near future," according to Kuwait's KUNA news agency on Sunday.

The Organization of Petroleum Exporting Countries has defiantly held its daily output quota at 29.67 million barrels since its last meeting in March, despite repeated calls from US President George W. Bush to hike production.

Oil prices are unlikely to fall back below 90 dollars, the Venezuelan energy minister Rafael Ramirez said on Monday.

"We believe that prices will remain around this level, at least around 90 dollars," Ramirez told reporters on the sidelines of the International Energy Forum in Rome.

"Oil prices can't fall" much further because "production costs have increased," he said.

Iraqi oil minister Hussain Al-Shahristani argued that an increase in OPEC production would not bring relief since prices were being driven primarily by speculative investment in commodities.

"There isn't much OPEC can do," the minister told reporters.

An increase in output "is not going to solve the situation. The solution is in the hands of the speculators. They're the ones who are fixing the price and not the producers," Al-Shahristani added.

In recent months, oil prices have also been boosted by the weak dollar.

The sliding value of the US currency makes dollar-priced goods cheaper for foreign buyers and therefore tends to encourage oil demand, traders said.

America is slowly becoming a third world banana republic where there will be two classes of people. The ultra Rich and the dirt poor. $4.00 a gallon gas is destroying the standard of living of millions in the USA who could barely make ends meet as it is and now have to make the choice between putting gas in their car or food on the table.

For minimum wage workers, it is reaching a point where it may not even be worth it to drive to work, considering it could cost 2 hours pay (after taxes) worth of gas just to get to work and back that day.

To the ignorant, clueless, American idol watching Americans who ignored Ron Paul. I bet you are going to start waking up real soon.