By Ijeoma Agudosi-Lagos
Crude oil jumped the most in two weeks on signs that output may contract from two nations accounting for about 9 percent of OPEC production.
Prices remain near a five-year low, and the United Arab Emirates said the 12-nation group won’t rein in production in response to the slump.
But that are fears that workers at Nigerian oil platforms and shipping terminals which began an indefinite strike (monday) would soon affect production.
But OPEC won’t cut output even if prices fall as low as $40 a barrel, U.A.E. Energy Minister Suhail Al-Mazrouei said.
Oil fell into a bear market this year amid the highest U.S. production in three decades and slowing growth in global consumption.
Prices have fallen about 20 percent to the lowest in five years since the Organization of Petroleum Exporting Countries decided at a Nov. 27 meeting not to cut production to tackle the glut.
The group has pumped more than its output target of 30 million barrels a day for the last six months.
“Libya may have helped the market stay above $60,” Christopher Bellew, senior broker at Jefferies International Ltd. in London, said.
“Maybe some optimists think that $60 marks the bottom of the market, but I can see nothing to support that theory.”
Nigerian oil workers’ unions Pengassan and Nupeng, who are demanding changes to the country’s oil industry, instructed members to stop all work at facilities including oil platforms and export terminals.
“You will soon begin to see shutdowns of our oil flow,” Emmanuel Ojugbana, a spokesman of the Petroleum and Natural Gas Senior Staff Association of Nigeria, said.
“If the strike is allowed for another few days, I can assure you that there will be complete shutdown.”
But at the domestic environment the NIgerian National Petroleum Corporation (NNPC) boosts that the strike will not disrupt fuel supplies, in a statement issued by Ohi Alegbe, spokesman for the NNPC.
Nigeria, the largest producer in Africa, pumped 2.18 million barrels a day last month, according to data compiled by Bloomberg.
It gets 95 percent of its export earnings and 70 percent of government revenues from oil.
Rates on the country’s bonds due July 2023 rose to an all-time high of 7.36 percent Dec. 12.
OPEC decided last month to keep output unchanged to protect the group’s market share, even if it has a negative effect on crude prices, the official Kuwait News Agency reported on monday, citing Oil Minister Ali al-Omair.
An increase of about 6 million barrels a day in non-OPEC supply, from countries including the U.S. and Russia, together with speculation in oil markets triggered the recent drop in prices, OPEC Secretary-General Abdalla El-Badri said monday at the Dubai conference.