Oil Prices Today Hit Two-year High, Nigerian Rig Attacked

With the announcement the Federal Reserve was going to print another $600 billion in U.S. dollars to buy up government debt in an attempt to stimulate the economy, oil prices, and other commodities, have been pushed up as the value of the U.S. dollar continues to plummet.

That means the industry is under tension, and when anything is added to the mix, oil prices can spike, like they have today with the reported attack on a Nigerian oil rig.

The main contract for light sweet crude for December delivery in New York surged to 87.49 a barrel, reaching its highest level since the latter part of 2008.

In Nigeria an oil rig in the Okoro field was attacked, with five crew members thought to be taken hostage. Usually that results in a ransom demand being made and paid to criminal gangs operating in the region.

So with the new implementation of quantitative easing, every time something major happens affecting oil prices, one way or the other we'll see swings in price in response to them.

Going forward, most of that will probably be on the upside for oil, as well as a number of other commodities.

ExxonMobil (NYSE:XOM) Discovers Rich Gas Condensate Off Nigeria

ExxonMobil (NYSE:XOM) revealed today it has made a discovery of rich gas condensate off the coast of Nigeria.

The find was made in the Pegi-1 discovery well, with about 165 net feet of rich gas condensate found. Rich gas condensate is a form of natural gas liquid.

Mark Ward, chairman of Mobil Producing Nigeria Unlimited, the joint venture of Exxon in Nigeria, said, "We are focused on developing oil and gas reserves and supplying natural gas that will boost commercial power production in line with the federal government's aspiration."

Nigeria has been desperate to wean their people off of expensive diesel-fired generators because of the shortage of electricity in the country.

To that end, they added in their statement, that "Significant additional potential remains in untested deeper targets within the Pegi fault block as well as in adjacent fault blocks."

Shell (NYSE:RDS-A) Nigerian Pipeline Almost Completed

Royal Dutch Shell Plc (NYSE:RDS-A) said the $1.1 billion Nigerian pipeline is close to being completed, which will be used to transport oil to its Bonny export terminal.

The 60-mile long pipe will be able to transport approximately 600,00 barrels of crude oil a day to the Atlantic coast terminal.

Shell said the pipeline was built to replace a number of old pipelines, and will draw oil from 14 stations around the region.

Unfortunately this will do little to curb the notorious theft of oil from Nigerian pipelines, which results in oil spills from the damage to the pipelines coming from the thieves tapping into them and extracting the oil to resell to offshore vessels.

Through 2009, oil production over the last several years had dropped over 25 percent from the roving, armed gangs stealing the crude and damaging the pipelines.

After an amnesty offered by the government some of the activity decreased, but Shell said they see it picking up again.

It looks like this new pipeline will suffer the fate of the previous ones, but there's nothing Shell can do about that if they want to continue to produce oil in the area.

Now it's a cost of doing business, put a high one to pay, as they've replaced close to 1,000 kilometers of pipelines over the last several years.

Terrorist Attack on Nigerian Oil Pipeline

Another oil pipeline in Nigeria was possibly attacked by major terrorist group Emancipation of the Niger Delta, which demands funds from the oil transferred through the pipeline.

There's also a possibility that two tribal communities, the Ogulagha and the Odimodi, may have participated in the attack, as they have fought over land ownership for some time that the pipeline runs on, battling for a higher share of the money.

Over the last couple years, ongoing attacks on oil pipelines has resulted in production declining by 25 percent in Nigeria. Italy's Agip, subsidiary of Italian energy behemoth Eni SpA, owns the pipeline.

Nigeria is the United States fifth-largest supplier of oil.

Oil Prices Fluctuate on Demand and Economic Concerns

Uncertainty is the word floating around concerning oil prices, as investors await the decision concerning the government bailout plan, the decreasing demand for oil, and the time it will take to bring platforms and rigs back to production from recent storms.

Other factors in the mix are the cut in production announced by OPEC earlier in September, as well as the continued threat to Nigerian oil procution by regional terrorists.

The potentially serious consequences on the value of the dollar from the ill-advised financial bailout is also on the minds of oil investors going forward.

Fear and uncertainty keep oil and other commodities in an unpredictable mode. We'll see continued fluctuation in prices going forward until things settle down. Early morning trading on the NYMEX had November deliver for sweet crude dropping to $105.57, although they continue to move up and down from positive to negative territory.

Shell Says Nigerian Pipeline Attack will have Minimal Impact on Oil Production

Shell said the recent attack on an oil supply pipeline in southern Nigeria won't have too much impact on oil production, after it found a leak on a pipeline connected to teh Bonny exports terminal - the largest in Nigeria.

"We discovered there was a major leak on the Greater Port Harcourt swamp pipeline. The leak appears to have been caused by explosives. We have isolated the line preparatory to repairs," Shell spokesman in Lagos Tony Okonedo told AFP. "Small quantities of oil have been shut in to allow for necessary repairs."

Shell is the largest oil exporter in Nigeria, accounting for approximately half the 2.1 million barrels a day output.

The company's pipelines have been under attack frequently over the last couple years, with a terrorist group named Movement for the Emancipation of the Niger Delta (MEND) claiming responsibility.

Shell said oil production has been cut back slightly as a result of the attack, as repairs are being made.

Oil surged to a new record high of $117 a barrel on Friday.