Fijilive
Oil prices dips amid supply-demand tensions
January 14, 2012 12:00:00 AM
Oil prices dipped on Friday at the end of a week in which the prospect of reduced energy demand offset tight supply worries caused by turmoil in key crude producers Iran and Nigeria.

New York's main contract, West Texas Intermediate for delivery in February fell 40 cents to $98.70 a barrel.

Brent North Sea for February dropped 82 cents to $110.44.

A surprisingly big increase in US crude oil reserves announced this week hit oil prices already under pressure from eurozone debt worries and slowing growth in Germany.

Worries about demand in the Europe only heightened on Friday as France, Austria and Italy saw their credit ratings downgraded.

That was enough to offset concerns about supply.

"Geopolitical supply side issues continue to be the key bullish factor affecting oil prices," said Victor Shum, senior principal at Purvin and Gertz international energy consultants in Singapore.

"Besides Iran, the more immediate concern that could affect supply are the strikes in Nigeria."

A nationwide strike in Nigeria over the removal of fuel subsidies entered a fifth day after talks between the president and labour leaders failed to reach a deal.

The main oil workers union has threatened to shut down crude production by the weekend if the government did not reverse the decision, a move that more than doubled fuel prices in Africa's top crude exporter.

Nigeria produces more than two million barrels per day and is a key oil supplier to the United States and European Union.

Meanwhile, concerns over an immediate disruption in Iranian crude exports have eased on news that the threatened EU oil embargo on Tehran might not take effect for six months, analysts said.

The phased implementation of the embargo would make the break less painful for financially stressed European countries that depend on Iranian crude -- Italy, Greece and Spain.

The EU is collectively the second-biggest destination for Iranian oil exports after China, taking in about 450,000 barrels per day.

AFP