The oil markets are that sensitive now. Jeez, I'd hate to see how they
act during hurrucan season...
UPDATE 4-Oil leaps a dollar on Italy refinery fire
(Updates throughout, previous SINGAPORE)
LONDON, May 1 (Reuters) - Oil climbed more than a dollar on Monday
after a refinery fire in Italy added to fears Iran's defiant pursuit of
its nuclear programme and violence in Nigeria will lead to a global
fuel shortage.
IPE Brent crude futures <LCOc1> stood 66 cents higher at $72.68 by 1111
GMT. Earlier they had risen more than a dollar to a session high of
$73.05.
U.S. light, sweet crude <CLc1> jumped 59 cents to $72.47 a barrel, off
a session peak of $72.85.
Prices were driven higher after a weekend fire that shut ERG (ERG.MI:
Quote, Profile, Research) group's 160,000 barrel per day (bpd) Impianti
Nord refinery in Sicily [nL01506866] renewed concerns about inadequate
refining capacity.
"It's all to do with the refinery in Sicily," said Rob Laughlin of
brokers Man Financial in London.
But he added that thin volume because of a public holiday in Europe and
much of Asia was exaggerating price moves.
Concern about years of underinvestment in the refining sector, together
with worries about disruption of unrefined crude, especially in Iran
and Nigeria, has generated a sustained rally in oil prices.
U.S. crude hit a record of $75.35 before easing last week, partly
because of U.S. President George W. Bush's decision to ease fuel
standards temporarily to increase availability of refined products.
POLITICAL TENSION
But concerns overall crude supplies could run short because of the
tension in major oil producing countries prevented a deeper sell-off.
"Supply side factors continue to be the wild card for further price
advances, but if these fail to materialise, we believe oil prices will
fall back towards the $65 a barrel level," Deutsche Bank wrote in a
research note.
"We believe that another shock could take prices up over $100 a
barrel," it warned, but said prices were unlikely to be sustained at
this level.
Iran, which the world's nuclear watchdog said last week had ignored
international calls to abandon its atomic programme, vowed on Sunday to
carry on pursuing a nuclear fuel cycle and to strike back if it is
attacked. [nL30525164]
U.N. ambassadors from the United States, Britain and France are
expected to introduce this week a Security Council resolution to oblige
Iran legally to comply with demands to halt enrichment.
Failure to do so could result in limited sanctions, although Russia and
China -- the other two veto-wielding council members say they do not
favour such a move for now.
Violence in Nigeria, where militant attacks have cut crude production
by a quarter, also added support to oil markets.
The Movement for the Emancipation of the Niger Delta, which wants more
local control over the southern delta's oil wealth, said it had
detonated 30 kg (66 lb) of dynamite in a car bombing close to a
refinery in the oil capital of Warri.
The militants said it was a warning to oil industry workers and
investors, singling out the Chinese government, which last week
clinched a multi-billion dollar deal for access to oil acreage.
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