Oil Jumps 2% on Oilfield Shutdown

Elena
07 Aug, 2006
New York City

BP has a 26% stake in the Prudhoe Bay field, meaning its own production would be cut by 100,000 barrels a day, while 400,000 barrels a day of crude oil would be taken off the world market. BP''s shares dropped 2% on the LSE.

[R]8:00AM BP shut down Prudhoe Bay.[/R]
Crude for September delivery jumped 2% to $76.69 a barrel after oil company BP ((BP)) shut down the nation''s biggest oilfield Prudhoe Bay in Alaska, taking 400,000 barrels a day of crude oil off the world market. The reduction represents almost half the total daily production from the North Slope, and about 8% of daily U.S. output, or about 2.6% of U.S. supply including imports, according to data from the U.S. Energy Information Administration. BP officials said they didn''t know how long the Prudhoe Bay field would be shut down, but BP America Chairman and President Bob Malone said Prudhoe Bay will not resume operating until the company and government regulators are satisfied it can run safely without threatening the environment. BP has a 26% stake in the Prudhoe Bay field, meaning its own production would be cut by 100,000 barrels a day, or around 2.5% of the company''s worldwide production. BP''s shares dropped 2% on the LSE.


[R]7:30AM Japan falls due to slump in tech stocks and higher oil prices.[/R]
Asian markets finished mostly lower on Monday. Japan''s Nikkei 225 Average ended the day down 2.23% to 15,154.06. Sony Corp. lost 1.74%, Toshiba Corp. sank 1.79%, NEC Corp was off 2.75% and Hitachi Ltd fell 1.85%. Auto makers performed better. Toyota Motor which reported a record quarterly profit on Friday, advanced 0.99% and Honda Motor was up 0.26%.

In Hong Kong, the Hang Seng Index advanced 0.39% to close at 16,953.55. Clothing retailer Giordano International Ltd surged 17.94% after the company confirmed over the weekend that Japan''s Fast Retailing was interested in acquiring a stake. CNOOC Ltd, offshore oil firm, gained 1.35%. Refiner and service-station operator Sinopec Corp. was up 1.16%.

South Korea''s Kospi index lost 1.15%. Samsung Electronics, the country''s largest exporter, fell 1.46%. Hyundai Motor, reporting Monday morning that second-quarter net profit fell 37%, dropped 0.52%.China''s Shanghai Composite settled down 1.45% due to weak demand for the institutional tranche of Air China''s $1 billion IPO suggesting that a wave of enthusiasm over new issues might be easing. Singapore''s Straits Times Index declined 0.17%, while Australia''s S&P/ASX 200 added up a 0.12% gain as commodity-related stocks including Rio Tinto and Woodside Petroleum gained


[R]6:30AM European markets were lower in morning trade due to oil prices rise.[/R]
European markets traded lower in morning sessions on Monday. The FTSE 100 declined 1% at 5,832.1, the Xetra Dax in Frankfurt slipped 1.5% to 5,635.12 and the CAC-40 in Paris was off 1.5% to 4,962.57. BP’s Alaskan closure cut output down by 400,000 barrels a day, 8% of US production, and pushed the price of crude oil back up above $76 a barrel. But despite the surging oil price, the sector was weaker. BP fell 1.8%.

Other oil producers also fell. OMV of Austria shed 0.8% and ENI of Italy sank 0.6%, Statoil of Norway bucked the downward trend gaining 0.6% as well as Neste Oil of Finland adding 0.3%. Low-cost airline EasyJet announced full-year revenues and costs would be slightly higher than expected but maintained its guidance for a 40-50 per cent rise in annual earnings. The company fell 1.2%.

Among insurance companies, Swiss Re was reported to be considering a bid for Scottish Widows, the insurance arm of Lloyds TSB. Swiss Re said it had no comment on the report. Lloyds TSB also declined to comment. LTSB fell 0.8% and Swiss Re shed 0.8%.

Light, sweet crude oil for September delivery was up $1.23 to $75.99 a barrel, while gold dealers in London fixed a recommended price of $647.25 bid per troy ounce at midmorning, down from $648.50 on Friday. The U.S. dollar was higher against most other major currencies in European trading Monday. The euro was quoted at $1.2856, down from $1.2875 late Friday in New York. The British pound bought $1.9058, down from $1.9082, while the greenback purchased 114.94 Japanese yen, up from 114.39.