Oil prices jumps 4.8% on supply concerns

May 18, 2009 by · Leave a Comment
Filed under: Commodities News 

Well here we go again, Oil prices are on their way up on more violence in Nigeria and fire at Sunoco (U.S. NE Refinery).  On NPR this morning, they reported that an estimate came out that gas prices would rise 15% in 2010 alone.  

With the economy still in recession or depression, depending on who you ask.   Many projects where pulled offline as the oil prices dropped because they are operating at a loss at those low prices.   It takes time to get those project back online so the time between getting them running and getting that product to the refiner.   That can be a formula for getting increases on prices as there is more demand on the supply side of this energy equation.  

News (CNN Money):

Oil prices rose almost 5% Monday after a fire at a major American refinery and violence in Nigeria renewed supply concerns going into the summer driving season.

Light, sweet crude for June delivery rose $2.69, or 4.8%, to settle at $59.03 a barrel. Monday’s increase was the highest percentage jump since April 9, when prices rose 9%.

The Movement for the Emancipation of the Niger Delta said they had blown up two oil and gas pipelines in the region and would block waterways to disrupt exports, according to Reuters. Nigeria is Africa’s biggest exporter of crude.

Meanwhile, an explosion ripped through a major oil refinery in the U.S., compounding supply worries.  Sunoco – the largest refiner in the Northeast – said the incident sparked a fire in the ethylene unit of its Marcus Hook, Pa., plant at 10 p.m. ET Sunday. The fire was still burning Monday, though it was “contained and under control,” said Sunoco spokesman Thomas Golembeski.

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