Earlier today it looked like we were going to see a down day for oil prices, but over the past couple hours things have turned around dramatically with prices once again testing the psychological $70 barrier. Prices for the front running oil futures are now trading up $0.69 on the day to $69.34.Yesterday we saw how the first wave of panic was hitting the market over the current strike in Nigeria which threatens to cut some two million barrels a day in exports, and those fears seem to be at the root of today's upside as well. The strike, which got under way on Wednesday, has yet to impact the country's oil exports, but concerns are weighing on traders as union leaders in Nigeria decided to extend the strike into its third day.
Oil disruptions from Nigeria, the world's eighth-largest exporter, are nothing new. The country was already running at only about 75% resulting from attacks on its infrastructure by hostile militants. The current strike by the union workers come in reaction to what they feel are unfair price increases set in place by the government on fuel prices, and so far this strike has been a non-violent protest. But the fear is that this situation could change quickly.
After talks failed between the government and union leaders today, the heads of the unions announced that the strike would continue and they would not be giving in just yet. On the other side of the equation, the government made it clear that they had just about had enough with the blockades and intimidation by unionists the strike has created. A recipe for disaster? It definitely could be, and the market seems to be aware of that which is helping push prices up to close out the week.
Other factors that continue to work in the favor of higher prices remain to be the standoff between Iran and the West over its nuclear ambitions, the upcoming hurricane season, and the summer increase in demand for gasoline.
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.
Other factors that continue to work in the favor of higher prices remain to be the standoff between Iran and the West over its nuclear ambitions, the upcoming hurricane season, and the summer increase in demand for gasoline.
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.
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