Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
The Death of Japan's Real Estate Dream - 21st Jul 18
SMIGGLE Amazing Mega Shopping Haul, Pencil Cases, Smigglets and Giant Back Packs! - 21st Jul 18
Cayton Bay Beach Caravan Park Holiday - What's it Like? - 21st Jul 18
Gold Stocks Investment Wanes - 20th Jul 18
Diversifying Your Stock Investing Strategies is Smart Investing - 20th Jul 18
Custom Global Stock Market Indexes May Be Sounding Alarms - 20th Jul 18
S&P 500 Just 2% Below Record High, But There's More Stock Market Uncertainty - 19th Jul 18
Stock Market Technical Picture - 19th Jul 18
Gold Market Signal vs. Noise - 19th Jul 18
Don’t Get Too Bullish on Gold - 19th Jul 18
Bitcoin Price Rallies to Upper Channel – What Next? - 19th Jul 18
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

How to Profit if the Nigeria Elections Drive Up Oil Prices

Commodities / Crude Oil Apr 12, 2011 - 07:49 AM GMT

By: Money_Morning

Commodities

Jon D. Markman writes: Oil prices are on the rise for a bevy of reasons - soaring demand in emerging markets, the weak dollar, and a strengthening U.S. recovery, to name a few.

However, supply disruptions and civil unrest in the Middle East-North Africa (MENA) region in recent months have had the biggest impact on oil prices. Egypt, Libya and Yemen have all played a part in driving up oil prices, and now they're about to be joined by another volatile oil producer.


I'm talking about Nigeria.

Nigerians this month are voting for representatives to their national assembly and for governors of the country's 36 states, as well as their president. Past electoral cycles in this incredibly important African country have led to a lot of violence and disruptions in the global oil supply infrastructure.

Violence during the last Nigerian election cycle, in 2007, led to attacks on oil and gas wells, processing plants and pipelines that halted the flow of 1 million barrels a day.

A supply drop of that magnitude could take oil prices -- already running at $110 a barrel - as high as $116, Andy Lipow, president of oil-trading adviser Lipow Oil Associates, told The Wall Street Journal.

Nigeria twice postponed parliamentary elections this year due to failed logistics. And military and security agencies are being deployed nationwide after political rallies turned violent over the weekend.

Separate bomb blasts ripped through a polling station and a collation center in northeastern Nigeria as the first of the country's elections got underway on Saturday.

That follows a blast last month that ripped apart an oil facility run by a subsidiary of Eni S.pA. (NYSE ADR: E), the big Italian energy conglomerate. The Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for that attack, and promised more to come.

Turmoil in Libya and Egypt obviously put a kink in the supply chain, but neither of those countries is as important to the United States as is Nigeria.

That's because much of the 2.2 million barrels of oil a day that Nigeria pumps out of its offshore wells goes straight to the ports of New York and New Orleans - whereas Libyan oil mostly goes to Italy and France.

More than 10% of U.S. oil imports come from Nigeria, including 980,000 barrels a day in January, according to the CIA World Fact Book. That makes Nigeria our fourth-largest supplier, after Canada, Saudi Arabia, and Mexico.

The bottom line: Oil prices are now elevated due to the drop in Libyan production, fears of a constriction in excess oil supposedly available in Saudi Arabia, and stronger demand in emerging markets. But the world has not yet factored in any disruption in the flow of oil from Nigeria.

If the situation in that African country intensifies as its elections move forward, you can expect oil prices to head at least north of $115 a barrel on the NYMEX from their current $110 level.

Investors can brace for the increase by investing in an exchange-traded fund (ETF) such as the SPDR S&P Oil & Gas Explorers & ProducersFund (NYSE: XOP) and theSPDR Oil & Gas Equipment & ServicesFund (NYSE: XES).

You might also consider one of several energy positions I've recommended in the past, including: Baytex Energy Corp. (NYSE: BTE), Whiting Petroleum Corp. (NYSE: WLL) and National-Oilwell Varco Inc. (NYSE: NOV).

Source : http://moneymorning.com/2011/04/1...

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules