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Oil prices jump on Saudi arrests
Oil prices jump on Saudi arrests
Saturday April 28, 2007
World crude prices surged on Friday as Saudi Arabia announced it had arrested a ring of alleged militants plotting airborne attacks on oil facilities and army bases.
The news from the world's biggest oil exporter subsumed weak first-quarter growth data in the United States, which showed the economy expanding by its weakest pace in four years.
New York's main oil futures contract, light sweet crude for delivery in June, rose 1.40 dollars to close at 66.46 dollars a barrel.
In London, the price of Brent North Sea crude for June delivery firmed 76 cents to settle at 68.41 dollars a barrel.
"The forces that brought prices to here are extant as the Saudi story reminds us with brutal clarity," Man Financial analyst John Kilduff said.
"When more is known about the level of sophistication, and how close to execution were the militants' plans, it could produce new highs, yet again," he said.
Earlier Friday Saudi Arabia announced it had seized arms and money and rounded up 172 militants which it said were plotting the attacks.
"Some individuals were training to fly to carry out terrorist attacks ... Some of the cells arrested planned to target oil installations and refineries," interior ministry spokesman General Mansur al-Turki told AFP.
Five of those detained were linked to a failed attempt to blow up an oil-processing plant, the world's largest, in Abqaiq in the oil-rich Eastern Province in February 2006, according to the ministry.
The developments in Saudi Arabia, the kingpin of the OPEC oil cartel, overshadowed the announcement that the US economy grew by just 1.3 percent in the first quarter of 2007.
That would suggest lower demand for crude in the world's biggest energy-consuming nation. But at the same time, US demand for gasoline is rising ahead of the summer driving season, lending support to oil prices.
The US Department of Energy said Wednesday that motor fuel reserves sank by 2.8 million barrels in the week ending April 20. That marked the 11th consecutive weekly drop for gasoline inventories.
"On the demand side of the ledger, gasoline is very bullish," James Williams at WTRG Economics said.
"Taken as a whole the report is bullish with higher gasoline consumption and low inventories dominating the stock data," he said.
Traders were meanwhile tracking the violent fallout from recent presidential elections in Nigeria, which is Africa's biggest crude oil producer.
"There is a lot of uncertainty right now," Calyon analyst Mike Wittner said.
The US government on Friday voiced dismay at what it said was Nigeria's missed chance to progress in its democratic process, after a "seriously flawed" vote marred by "malfeasance and vote-rigging."
Nigeria's current oil production is down an estimated 25 percent owing to violence in the crude-rich Niger Delta.
AFP
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