Prices appeared to be heading steadily downwards until, on the last day of the month, WTI briefly touched $103.05, and Dated BFOE went above $100 for the first time, hitting $100.99/bbl. Spot-month IPE-Brent settled at $100.10/bbl and new records were set in various product markets across the world, including US heating oil futures, with a prompt-month trade at $2.8632/gall; Singapore kerosine; and European gasoil, which gained over $100/t during February to reach $918.50/t on 29th February.

Against this background, OPEC ministers meeting in Vienna on 1st February decided not to raise the group’s output ceiling of 29.673 mn bpd despite pleas from consuming countries to do something to ease high price levels. Within OPEC itself there was considerable attention on unrest in Nigeria and Iraq and its effect on production and exports.

In Nigeria, the Movement for the Emancipation of the Niger Delta (MEND) has threatened reprisals against the oil industry for the alleged killing of a separatist leader by the Nigerian police (the government claims he is still alive). Around 500,000 bpd of the country’s production is shut-in as a result of violence in the south of the country, which both stops production and delays the carrying out of repairs to damaged facilities. The latest act of sabotage is an attack on a pipeline owned by ENI in Bayelsa state, which has led to a loss of 85,000 bpd of production. Meanwhile, maritime workers want the seas of Nigeria declared a ‘war zone’ as a result of the high level of attacks and kidnappings carried out on offshore installations.

Iraq has halted the pumping of crude to Ceyhan following an attack on its northern export pipeline. Exports to South Korea’s SK Energy have been suspended following the signing of an upstream contract by SK with the Kurdistan Regional Government. SK imported 90,000 bpd from Iraq. Baghdad has declined to renew a 3,000 bpd contract held by Austria’s OMV, for the same reason. Uncertainties about world oil supplies have led to a request by US President George W Bush, to double capacity of the Strategic Petroleum Reserve to 1.5 bn bbl.

China says it will shut some coal-fired power stations and other industrial plants in the month before the Olympic Games in order to improve the air quality in Peking. The Chinese have also announced that they will open a new oil trading exchange-the country’s third-in March. Russia has launched a products trading exchange in St Petersburg, while the Singapore Exchange has closed its poorly-traded palm oil futures market, which was supposed to allow hedging by the biodiesel industry.

Australia has been suffering from petrol and diesel shortages following technical troubles at Sydney’s Clyde refinery. New refineries are being proposed in Algeria, Indonesia, Iran, Kazakhstan, Libya, UAE and the US. Plans for a 240,000 bpd refinery at Canton in China have been delayed by environmental concerns.