Oil price slip on profit-taking, Nigeria ceasefire

LONDON, Oct 26, 2009 (AFP) - Oil prices fell Monday on profit-taking and as a ceasefire took hold in Nigeria, whose crude production has been ravaged by militant attacks in recent years, analysts said.

New York's main contract, light sweet crude for delivery in December, shed 49 cents to 80.01 dollars a barrel.

Brent North Sea crude for December lost 40 cents to 78.52 dollars in early London trade.

New York crude oil hit 82 dollars on Wednesday, the highest level since October 14, 2008, as the market took its cue from a slumping US currency.

Nigeria's main armed group in the oil-rich Niger Delta declared on Sunday an "indefinite ceasefire" to encourage dialogue with the government but the Abuja authorities rejected the fighters' mediation team.

The Movement for the Emancipation of the Niger Delta (MEND) said it made its decision after the government "expressed its readiness to engage in serious and meaningful dialogue with every group or individual towards achieving a lasting peace in the Niger Delta."

MEND's attacks on Nigeria's oil industry have helped play havoc with oil prices on the world market and slashed the nation's output by a third since 2006. Nigeria is the world's eighth-largest oil producer.

Analysts at JBC Energy consultancy in Vienna said that the Nigerian ceasefire was "positive news" which would ease supply worries.

"Last week's announcement by the Nigerian government that it is willing to give 10 percent of the country's oil wealth to the residents of the Niger Delta appears to be paying dividends, with Nigeria's main militant group MEND announcing ... it is to reinstate a previous ceasefire to engage in talks with the government," JBC analysts said.

"However, the security situation in Iraq looks increasingly uncertain following two bombings at the weekend.

"This again put into question just how much the country will be able to increase its oil output in the next few years."

Iraqi security forces were on high alert on Monday, a day after twin suicide vehicle bombs blamed on Al-Qaeda killed 99 people and blasted government offices in Baghdad.

Source: AFP

Other news