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28 April 2008

Oil strikes new record near $120 on supply fears

PERTH (Reuters) - Oil struck a record high at $119.93 a barrel on Monday, extending the previous session's rally, as a strike closed a major British oil pipeline and as new violence in Nigeria reignited supply fears.


Simmering tensions between the United States and Iran also helped boost oil prices.


U.S. light crude for June delivery rose 88 cents to $119.40 by 2324 GMT, after striking a lifetime high of $119.93 a barrel shortly after electronic trading resumed after the weekend.
London Brent crude rose 66 cents to $117.


"Supply side concerns underpinned the oil price," David Moore, a commodity strategist at the Commonwealth Bank of Australia, said in a note to clients.


"Oil supplies from Nigeria have been disrupted by militant attacks and a strike by some oil workers. A strike at the Grangemouth refinery in Scotland has caused significant disruption to supplies from the North Sea," he said.


The 700,000 barrels per day (bpd) Fortis pipeline, which carries nearly half of Britain's oil, was closed on Sunday as a strike over pensions began at the neighbouring 210,000 bpd Grangemouth refinery in Scotland, operator BP (BP.L: Quote, Profile, Research) said.


The refinery, owned by international chemical company Ineos, produces a tenth of Britain's petrol and diesel but also supplies vital steam and power to BP's Kinneil plant that processes the crude oil coming ashore from 70 North Sea fields.


The government has said that there will be no overall shortages of fuel but conceded that there may be some local supply problems, particularly in Scotland and northern England.


BP said that assuming it got power back as soon as the strike ended and Fortis fields resumed production rapidly, the pipeline could be back in operation within 24 hours but might take a few more days to get back to full flow.


In Nigeria, unidentified gunmen killed five policemen and seized several weapons in a raid on a police station in the oil-rich southern Nigerian state of Rivers on Sunday, a police spokeswoman said.


The attack comes just two days after a strike and attacks by rebels forced Nigeria's two largest oil firms, Exxon Mobil (XOM.N: Quote, Profile, Research) and Royal Dutch Shell (RDSa.L: Quote, Profile, Research), to shut some production.


The strike forced Exxon to shut down 200,000 bpd of crude output, a senior union official said, while Shell has already been forced to shut 169,000 bpd of Bonny Light crude production after a pipeline attack in the Delta a week ago.


A step up in tensions between U.S. and the world's fourth-largest crude exporter Iran also contributed to oil's gain.


A cargo ship hired by the U.S. military fired warning shots at boats suspected to be Iranian, the U.S. Navy said on Friday, underscoring tension in the Gulf as the Pentagon sharpened its warnings to Tehran over its nuclear ambitions.


Iran denied there had been any confrontation between its forces and a U.S. ship, Iranian media reported, and said on Sunday a "disastrous situation" facing the United States in Iraq and Afghanistan, coupled with Washington's domestic issues, made any U.S. attack on the Islamic Republic unlikely.


Tensions between Washington and the OPEC nation last year helped send oil to record highs. Crude prices have surged more than five-fold since 2002 as supplies struggle to keep pace with rising demand in emerging economies, such as China.


Crude oil speculators on the New York Mercantile Exchange increased net long positions in the latest week, according to data from the Commodity Futures Trading Commission released on Friday.


Net crude long positions rose to 70,562 in the week to April 22, up from 66,526 in the week to April 15.

China train crash kills 66, injures hundreds

BEIJING (Reuters) - Two passenger trains collided in eastern China on Monday, killing at least 66 people and injuring hundreds as carriages derailed and toppled into a ditch, state media said.
Some 400 people were taken to hospital, with 70 in a critical condition, Xinhua news agency said, suggesting the death toll could rise further.


One train was en route from Beijing to the seaside resort of Qingdao when the accident happened in Zibo, Shandong province. The second train was from the resort of Yantai, in Shandong.


Both were likely operating at full speed at the time of the accident, the worst in China since 1997, a cargo worker said.


One passenger described escaping the wreckage with her 13-year-old daughter through a massive crack in the floor.


"We were still sleeping when the accident occurred," Xinhua quoted the woman, surnamed Yu, as saying. "I suddenly woke up when I felt the train stopped with a jolt. In a minute or two it started off again, but soon toppled."


The accident happened at a bend in the tracks and which caused the carriages to topple into a ditch, Xinhua reported, adding that blood-tainted sheets and broken thermos flasks littered the ground.


Four of the injured were French nationals, all of whom were taken to hospital with bone fractures, the report said.


CARRIAGES OVERTURNED


Pictures posted at the news portal www.sina.com showed carriages overturned and rescue workers milling around passengers wrapped in blankets.


The local Qilu Evening news said the railway had begun a new timetable on Monday.


State television said the rail line was built in 1897 and was due to be retired in favor of a high-speed link to be ready in time for the Summer Olympics, when Qingdao will host the sailing events.


Railway Minister Liu Zhijun had arrived at the site and President Hu Jintao had dispatched Vice Premier Zhang Dejiang to the scene, Xinhua said.
"The city government of Zibo has sent a 1,500-member strong team to help and console the victims' families," it added.


The cargo worker said trains were already backing up near his station due to the collision.
In January, a high-speed train ran through a group of maintenance workers in the dark in Shandong, killing 18.


China has invested about $100 billion in its railways in the past few years and is expanding the system to accommodate what is the world's most dense passenger and freight network.
As it stands, China's railways can barely keep pace with the country's breakneck economic growth or with the hundreds of millions of workers who are flocking from the countryside to booming cities.


Monday's accident was the worst in China since 1997, when more than 100 people were killed in a train crash in the central province of Hunan.


ASIAN STOCK MARKETS UP

HONG KONG (Reuters) - Asian stock markets rose on Monday as investors' confidence in the battered financial sector seeped back and the dollar held on to recent gains, despite the oil price hitting a fresh all-time high close to $120 a barrel.


Japan's Nikkei average .N225 broke through the 14,000 mark for the first time in two months as financials such as Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research), which soared 9 percent, surged on a growing sense that the worst may be over.


"There's no doubt now that confidence is growing that the worst of the credit crunch may be behind us, with a lot of the worries about risk and the financial system clearing up," said Noritsugu Hirawaka, a strategist at Okasan Securities.


"As a result, money that went into Japanese government bonds is now returning to stocks, especially financials."


The Nikkei was up 0.8 percent by 0142 GMT, while MSCI's index of stocks across the rest of Asia .MIAPJ0000PUS was 0.4 percent higher.


Friday's rout of Japanese Government Bonds continued as investors quit bonds to snap up stocks, driving the benchmark 10-year yield to a fresh six-month high of 1.675 percent. On Friday June 10-year futures 2JGBv1 suffered their biggest one-day fall since 2003 as investors abruptly changed their view of the outlook for Japanese and U.S. interest rates.


Bank stocks also helped Australia's benchmark S&P/ASX 200 index gain 0.6 percent, but some market watchers warned against throwing caution to the wind.


"The market seems to be saying that the worst is over and it is safe to get back into the water," said Hans Kunnen, head of investment markets research at Colonial First State.

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