Unrest in Ecuador and Nigeria converged with reports of fresh violence in the Middle East to lift crude-oil futures by more than 3% Friday (Aug. 19), according to CBS MarketWatch.
But the benchmark futures contract still ended over 2% below the week-ago close with traders wary of an already 50% run up in prices year to date.
In Ecuador Friday, protests by striking workers and the local population, hoping to secure a bigger share of the South American country’s oil revenue, forced the suspension of crude exports.
The situation in Ecuador is “just one more reason why crude oil will keep climbing to $70, $75, $80 and eventually $100 and higher,” said commodities trader Kevin Kerr, who edits the Global Resources Trader investment letter, a service of MarketWatch.
Crude for September delivery climbed to a high of $65.50 a barrel on the New York Mercantile Exchange. It closed at $65.35, up $2.08 for the session and stands well above its close around $43 at the end of last year.
However, the price on the benchmark contract was down $1.51 from a week-ago close of $66.86.
Meanwhile, September unleaded gasoline moved 4.1 cents higher to close at $1.9039 a gallon – down 5% for the week. September heating oil tacked on 3.23 cents to end at $1.8228 a gallon. It was down 4% from last Friday.
Ecuador is “the 13th largest supplier of oil to the U.S. and we get half their daily production of some 200,000 barrels,” said Phil Flynn, a senior analyst at Alaron Trading.
Helping to fuel the rally in oil was the shutdown of an oil field in Nigeria operated by Shell due to protests in the region as well as reports of rockets fired at U.S. navy ships in Jordan.
In the Jordanian port of Aqaba on Friday, missiles were fired at a U.S. Navy ship there and at the nearby Israeli port of Eilat, wire service reports said.
All in all, Friday’s price gain “underscores the political risk premium in the price of crude oil,” said James Williams, an economist at WTRG Economics.