Nigerian uncertainty sends oil price past $52

The price of crude vaulted above $52 today on news that a strike in Nigeria could affect output in the world’s seventh-largest oil exporter, while traders looked for signs of how this week’s US presidential election would affect the market.

Early today in Asia, December crude on the New York Mercantile Exchange was trading electronically at $52.25 a barrel – up 49c from its Friday closing. Prices jumped Friday after two days of falls.

National Australia Bank chief economist Allen Oster believed “markets were expecting Bush to get back in”, but could not say how prices would be affected.

Bush and Kerry have differing stances on using the US strategic oil stockpile. Kerry has long urged Bush to use the reserves to ease oil prices, but Bush has resisted doing so until a decision last month to loan out a small amount to help companies operating in the Gulf of Mexico that were hobbled by Hurricane Ivan in mid-September.

The reserve now holds roughly 670 million barrels of crude oil in underground caverns in Texas and Louisiana – close to its capacity of about 700 million barrels.

Nigeria’s main labour union yesterday called for a nationwide strike November 16 at the country’s largest petroleum producer – Royal Dutch/Shell Group – in a protest over local increases in fuel costs.

Nigeria is the fifth-largest source of US crude and exports around 2.5 million barrels daily.

Last week, oil prices fell after the US government said crude supplies had increased by four million barrels to 283.4 million barrels in its mid-week petroleum stocks report ahead of the Northern Hemisphere winter.

China’s move to cool its red-hot economy by raising interest rates also eased pressure on oil prices.

China is the world’s second largest consumer of crude.

While crude prices are still up by more than 70% from a year ago, they would need to surpass $90 per barrel to approximate the all-time high, in inflation-adjusted terms, set in 1980.

Recent price rises have been spurred by production outages in the Gulf, which has resulted in nearly 26 million barrels being locked in, along with supply disruptions and unrest in key producers Nigeria, Saudi Arabia, Iraq and Venezuela.