Oil futures hits $1000

1 Comment » January 2nd, 2008 posted by // Categories: Favorite Articles



Crude Oil Futures are quoted in dollars and cents per barrel.

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One Response to “Oil futures hits $1000”

  1. alukome says:

    GUARDIAN

    January 3, 2007

    Crude oil price hits $100 per barrel

    * NNPC, others may make budgets open
    From Azimazi Momoh Jimoh, Abuja (with agency report)

    FOR the first time, oil price has hit $100 per barrel at the international market. According to a British Broadcasting Corporation (BBC) report, the price increase was caused by violence in Nigeria, Algeria and Pakistan, the weak United States (U.S.) dollar and the threat of cold weather.

    The development came as the National Assembly plans a new move to tackle the crisis in the Niger Delta.

    Light sweet crude rose $4.02 to $100 a barrel in New York, prompting a drop in shares and a surge in gold prices.

    There are concerns that the high price of oil will stoke inflation at a time when many central banks are trying to cut interest rates to stimulate growth.

    The U.S. shares had already been hit yesterday by figures showing that the manufacturing sector was contracting. After oil broke the $100 barrel, they fell further, with the Dow Jones trading 215.1 points, or 1.6 per cent, lower at 13,049.73.

    But some analysts played down the relevance of passing the $100 mark.

    “The entire focus on $100 oil is frivolous,” said Tim Evans at Citigroup Futures Research in New York.

    “It is not a magic number. It doesn’t suddenly make this a fundamentally strong market.”

    Trading volumes were about half of their usual levels as traders returned from their New Year breaks, which may have exaggerated the effect of speculative transactions, analysts said.

    “I would imagine the speculators are the biggest drivers today,” said Phil Flynn from Alaron Trading in Chicago.

    The oil-producers’ cartel, the Organisation of Petroleum Exporting Countries (OPEC), has also blamed speculators for the high price of crude and said that there was enough of the fuel in the market to meet demand.

    But there are those who believe that oil prices can rise significantly higher.

    While daily price rises have been blamed on unrest in oil-supplying countries such as Nigeria, an underlying and significant factor has been an increase in demand from China and India.

    “$100 is just the beginning,” said Zachary Oxman, senior trader at Wisdom Financial in California.

    “This is kicking off what you are going to see this year. There will be huge moves up in gold and huge moves up in crude,” he added.

    As a way of resolving the crisis in the Niger Delta, the National Assembly may issue legal instruments to compel the Nigerian National Petroleum Corporation (NNPC) and all oil companies to make their yearly budgets open.

    This move is to allow the National Assembly determine the level at which the oil companies meet their obligations to the Niger Delta Development Commission (NDDC).

    In an interview with reporters yesterday at the National Assembly, Senator Heineken Lokpobiri, who is also the chairman of the Senate Committee on Sports, disclosed that the Assembly would come up with appropriate legislation to increase the amount to be paid by the oil firms to the NNDC.

    He also described the killing of some 13 persons on Tuesday by suspected militants as regrettable, adding that genuinely aggrieved Niger Delta people should be patient with their elected representatives to sort out the issue of infrastructure decay in the region with the appropriate authorities.

    The lawmaker blamed the Niger Delta crisis on the oil companies, which he said were not living up to their corporate responsibilities to the oil communities.

    His words: “I believe that part of the problem we are facing is that the oil companies, in collaboration with the NNPC, have actually failed in their corporate responsibilities to the host communities. If you go to those communities that produce oil, take for instance, the Escravos or Brass in Bayelsa, there are two communities – where the oil workers stay, which is like London, and where the natives stay, which is an eyesore. There is no way you will see those things and then be happy.

    “I believe that there should be a new policy for the oil companies to make them live up to their corporate responsibilities and provide what they ought to provide for the oil-producing communities. If you say you are staying in Brass to explore oil, the same environment where your people are staying should also be the same environment where the indigenes of those communities are staying. A situation where you have water in your base, but they don’t have water, where you have light round the clock at your operational base and then if you come to the communities there is none is unfair. I believe that the oil companies should be made to pay more.”

    The senator added: “Even the three per cent of the oil companies’ annual budgets they are expected to pay to the NDDC has not been fully implemented because we have difficulties in even knowing how much their budgets are. They hide their budgets from us. So, I think that this year, we will come out with some legal instruments to compel them to actually tell us how much they appropriate.

    “Even the NNPC itself is a problem; we don’t know how much the NNPC is appropriating; we don’t know how much the NNPC is spending. The National Assembly does not appropriate funds for the NNPC to spend. The NNPC gets the money and spends it the way it likes. This means that there is actually no accountability, no probity. This is the way the oil companies are also doing their things. And I believe the three per cent they are paying is not enough.”

    Lokpobiri also disclosed that the National Assembly would review the N444 billion allocated in the 2008 budget proposal for security in the Niger Delta, adding that 75 per cent of the money would be channelled towards the provision of physical infrastructure in the region.

    His words: “I believe that 2008 should be better. We thank God that the Appropriation Bill has not been passed into law. If truly the President’s intention is that N444 billion is for security in the Niger Delta, my own proposition, and I believe that is the view of all of us in the Niger Delta, is that 75 per cent of that money should be used for physical infrastructure development.

    “If that is done, everybody in the region will be kept busy; people will be happy instead of bearing grudges against the Federal Government. The National Assembly will do justice to that Appropriation Bill by slashing that money and giving more of it to physical development in the Niger Delta.”

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