Wednesday, March 28, 2012

Supply worries support New York oil prices

NEW YORK: Supply fears pushed oil prices higher in New York on Tuesday amid rising conflict between Sudan and oil-rich South Sudan and a Total North Sea production platform shutdown due to a major gas leak.

New York's main contract, West Texas Intermediate (WTI) crude for May, rose 30 cents from Monday to close at $107.33 a barrel.

In London, Brent North Sea crude for delivery in May fell 11 cents to settle at $125.54 a barrel.

Oil prices had climbed modestly in both markets Monday, but profit taking was muted Tuesday.

In New York, "the market was loathe to sell off because of Iran and tensions there, but there wasn't much today with (US) economic news," said Matt Smith at Summit Energy.

In addition to the long-running strains over oil producer Iran's nuclear program, geopolitical tensions in eastern Africa helped to keep prices buoyed.

A South Sudan official said Sudanese warplanes on Tuesday launched air raids on its oil-rich areas.

"It appears the dispute is widening, increasing the likelihood that the 350,000 barrels per day of shut-in production will remain offline for a protracted period, and placing further pressure on heavy, sweet crude supply," JPMorgan Chase analysts said in a research note.

Meanwhile, a big gas leak from a North Sea platform operated by French energy giant Total forced the evacuation of a second rig on Tuesday.

Anglo-Dutch oil and gas giant Shell, meanwhile, said it had evacuated nearby facilities as a precautionary measure.

"Exactly how Total intends to regain control of the leak remains unclear at this juncture, but if, as some reports indicate, a relief well is necessary, then the loss of production may be prolonged," the JPMorgan Chase analysts said.

- AFP/de

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