Nigeria's Poll Protests Spike Crude Oil Futures

Federal Republic of Nigeria Petroleum and Energy Minister Diezani Alison-Madueke. Nigeria and Algeria are working on a gas pipeline project that will extend through North and West Africa., a photo by Pan-African News Wire File Photos on Flickr.

Nigeria’s poll protests spike crude oil futures

Crude oil futures spiked at the weekend with the news of today’s governorship elections across Nigeria and the post-election violence in the country raising some supply concerns.

Light, sweet crude for June delivery was up 1.5% to $109.90 a barrel in trading on the New York Mercantile Exchange.

NJigeria It would be recalled that the outcome of Presidential election in Nigeria brought oil prices back below $108 a barrel on Monday as the Organisation of Petroleum Exporting Countries (OPEC) said that oil producers including Nigeria, are “concerned” at high crude prices.

The commodity dipped in Asian trade immediately news broke in the global market that incumbent President Goodluck Jonathan won twice as many votes as his closest rival in presidential elections, Muhammadu Buhari.

Nigeria, Africa ’s biggest oil exporter depends on crude proceeds to service more than 85 per cent of its budget.

The price surge above $109 a barrel last Wednesday was also buoyed by a report showed U.S. gasoline supplies fell for a second week, suggesting higher fuel costs haven’t yet curbed demand.

A weaker dollar — which makes oil cheaper for investors holding other currencies — and rising equity markets in Asia and Europe also helped boost oil markets.

By early afternoon in Europe , benchmark crude for June delivery was up $1.32 at $109.60 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 59 cents to settle at $108.28 on Tuesday.

In London , Brent crude for June delivery was up $1.42 to $122.75 a barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that gasoline inventories fell 1.8 million barrels last week, following a plunge of 7 million barrels the previous week. The API also said crude supplies rose 667,000 barrels while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 1.6 million barrels.

The Energy Department’s Energy Information Administration reports its weekly supply data — the market benchmark — later Wednesday.

Traders have been watching closely for signs that the 29 percent jump in oil prices since mid-February will undermine demand, but strong consumption numbers from the U.S. and China suggest that it hasn’t yet.

“There is little in the way of solid evidence that oil demand growth has slowed down from the unsustainably high pace of growth seen in 2010,” Barclays Capital said in a report.

Some Asian analysts expect higher fuel costs to quicken inflation and lead central bankers in the region to boost lending rates. China , South Korea and Thailand are likely to raise rates the most while oil price subsidies should lessen the impact of higher global energy costs in Indonesia , Malaysia and India , Credit Suisse said in a report.

“The oil price shock will encourage a more hawkish monetary policy stance in the short term than would otherwise have been the case,” Credit Suisse said. “Fiscal policy on the other hand will probably be somewhat more stimulative as governments attempt to shield the lowest paid from the harshest effects of the commodity price surge.”

“The (high) oil price is a concern,” Secretary General of OPEC, Abdullah El Badri said, adding that the organisation “sees that there is a $15-20 premium risk at this time.”