Concerns over deepening turmoil in the US financial system propelled oil prices above $100 a barrel again Thursday as investors turned away from equities in favor of commodities. Unrest in oil-rich Nigeria also supported prices. After opening lower Thursday, light, sweet crude for October delivery was up $3.69 to $100.85 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. Earlier, it had traded at over $102 a barrel. The gains built on a $6.01 increase Wednesday when the contract settled at $97.16, after dropping $10.03 the previous two trading sessions. Oil had jumped Wednesday as investors fled equities to crude as a short-term safe haven amid global market unrest. “Oil is not viewed as safe a haven as gold, but investors consider it safer than equities,” said Victor Shum, an energy analyst with consultancy Gertz and amp; Purvin in Singapore. “If these financial troubles lead to a world recession, however, that's going to affect demand big-time.” Stepped-up attacks by Nigerian militants against the country's oil infrastructure helped to support oil prices. In a fifth day of violence, Nigeria's main militant group said Wednesday that it had destroyed an oil-pumping station and a pipeline crossing southern Nigeria in a rare daylight attack. A spokesman for Nigeria's state oil company said Wednesday that militant attacks are now cutting the country's daily oil production by about 1 million barrels a day, 40 percent of what the country produced before the militant campaign began three years ago. “In the last few days, militant attacks in Nigeria have been stirring up again, but that's on the back burner right now,” Shum said. “I see downward pressure on oil in the near-term, with the key support level at US$90.” Commenting on the nervousness in the market, Vienna's JBC Energy noted that “the increase in oil prices ... could be a sign that investors can no longer trust each other and investments are being made in commodities that appear safe.” The US government reported Wednesday a bigger-than-expected drop in crude supplies, reflecting the shutdown of virtually all Gulf Coast oil production because of Hurricane Ike and Hurricane Gustav. The Energy Information Administration said US crude stocks fell by 6.3 million barrels for the week ending Sept. 12, much bigger than the 3.7 million barrel drop expected by analysts surveyed by energy research firm Platts. In other Nymex trading, heating oil futures jumped by nearly 6 cents to $2.8839 a gallon, while gasoline prices spiked by almost 5 cents to $2.5114 a gallon. Natural gas for October delivery rose by more than 23 cents to $8.143 per 1,000 cubic feet.
