Oil prices stayed on the boil above $53 a barrel on Monday, bolstered by persistent anxiety over OPEC member Nigeria and the nearly month-long loss of a quarter of U.S. Gulf of Mexico production, traders said. U.S. light, sweet crude oil futures were hovering near last week's all-time high of $53.40 a barrel, trading down one cent at $53.30 by 0348 GMT. Spare production capacity among OPEC members has been eroded this year by strong demand growth from China and elsewhere, leaving the global market little flexibility to cope with the type of disruptions now dragging on in the United States. "The main driver these days is the fact that world spare capacity is so low," said David Thurtell at Commonwealth Bank of Australia in Sydney. "It's never been this low and that means that we're in uncharted territory." About 475,000 barrels per day (bpd) of U.S. Gulf of Mexico oil production remains out of commission, nearly four weeks after Hurricane Ivan struck the region.
A third of that is expected to be resumed by the end of this month, the U.S. Minerals Management Service said on Friday. But operators say some output may be out until next year. More supplies to the United States were disrupted by weather at the weekend, as Tropical Storm Matthew forced the closure of the massive Louisiana Offshore Oil Port (LOOP) on Friday. LOOP, which unloads around 900,000 bpd of imported oil and 500,000 bpd of oil from the Gulf Mars platform, was expected to reopen Sunday night. Matthew weakened into a tropical depression on Saturday and had not disrupted any other operations.
NIGERIA STRIKES, SAUDI PLEDGES BUFFER
Nigeria also remained a worry after repeated threats to its production, starting with a warning by delta rebels two weeks ago followed by a two-day oil unions strike at leading producer Royal Dutch/Shell Group late last week. Unions were set to begin a four-day general strike over fuel prices on Monday, although oil executives said there should not be an immediate impact on output, which accounts for about 3 percent of the world's oil. Saudi Arabia, the only country with significant spare capacity, sought at the weekend to dispel worries over the waning spare supply cushion, reiterating that it would keep a reserve of up to 2 million bpd capacity to meet future growth. "There is no shortage of oil and there will be no shortage of oil, and we are willing to meet demand as it rises," Saudi Oil Minister Ali al-Naimi told reporters. Naimi also repeated that the kingdom could immediately boost production by 1.5 million bpd, but oil traders say the mostly dense, high-sulphur crude, which are as much as $10 higher than for heavy grades, will do little to cool headline prices. "There's plenty of sour crude around, but not much sweet," said Thurtell. Other members of the Organisation of the Petroleum Exporting Countries (OPEC) were already starting to talk about the possibility of raising the cartel's formal output ceiling, although this would make little difference to real production levels. The 10 members of the group excluding Iraq are pumping around 28 million bpd, above a new quota of 27 million bpd that comes into effect from November. With oil prices extending this year's rally well above $50 a barrel, a level first breached two weeks ago, oil importers are growing increasingly edgy about the impact on their economies. "(Oil) is creating headwinds for the otherwise very strong economy," U.S. Treasury Secretary John Snow said at the weekend. High oil prices will cut economic growth in South Korea, the world's fourth-biggest oil buyer, by 0.4 percentage points next year, Finance Minister Lee Hun-jai said on Monday.///