WPL's major operations are in Australia. Australia is seen as the most stable country in terms of economy and political risk. With the rising price of oil and the problems in Iran, Nigria etc, Investors will tend tofocus on companies with operating facilities in lower risk countries. WPL is one of the best stocks to buy!
Oil spikes to $A100 a barrel Mandi Zonneveldt, AAP
April 13, 2006 This article from : AAP OIL pushed through $A100 a barrel for the first time on Wednesday amid mounting nervousness on world markets about the price surge.
The Asian benchmark Tapis, on which Australian prices are based, rose to $US73.51 a barrel, or $A100.23. Light sweet crude was trading at $US68.98 in New York late on Wednesday.
Oil has risen sharply this month – due partly to the Australian dollar trending lower – on rising tension over Iran's nuclear ambitions.
Iranian President Mahmoud Ahmadinejad said on Wednesday Iran had joined the international club of states that have nuclear technology.
Intense speculation that the US is planning to take military action against Iran if diplomacy over the nuclear issue fails has only heightened market concerns.
The rising oil price clipped Wall Street's enthusiasm on Tuesday night and took some shine off the Australian bourse on Wednesday, although analysts said profit-takers were active in the local market.
Economists said Australia would weather the latest price hike, but predicted a shock to the local economy if political issues forced the price of oil up quickly.
Growing demand for oil, particularly from China and India, has put greater pressure on world supplies making oil more vulnerable to price shocks.
The situation has been made worse recently by supply issues in Nigeria and Venezuela. Almost a quarter of the output from the Gulf of Mexico remains offline due to hurricane damage.
The National Australia Bank yesterday raised its oil price forecast, predicting an average price of $US65.25 a barrel this year.
NAB minerals and energy economist Gerard Burg said $US100 a barrel of oil was possible, but only if a number of factors combined to push the price up.
"To get that high would be pretty difficult, at least in the short term," he said.
AMP Capital Investors' chief economist Shane Oliver said the oil price would get to $US100 a barrel in the next few years.
He predicted a series of gradual price increases, giving the economy room to adjust.
"But if there's a major problem in Iran and we go to $US100 overnight the situation would become more dangerous and then we would have talk about a global recession," he said.
While the Australian market dipped on Wednesday, Macquarie portfolio manager Damian Graham said investors appeared less concerned about higher oil prices than in the past.
He said transport companies and retailers were most likely to feel the pinch, but higher oil prices were good news for resource stocks.
ANZ chief economist Saul Eslake said $US40 a barrel of oil was a relic of the past, but the longer the oil price remained high the better the economy was likely to cope.
He said strong oil prices would see oil companies take greater risks in exploration and prompt investment in developing alternatives to oil.
Mr Eslake said continued high prices would also force consumers to adjust their use of the fuel.
Oil hit a record $US70.85 a barrel on August 30 last year after Hurricane Katrina halted production in the Gulf of Mexico, however the Australian dollar price only reached $A93.37, with the Australian dollar trading at US74.91¢ at the time.
However the price of oil is still relatively low in real terms. It traded at the equivalent of $US105 a barrel during the 1970's oil shock.
WPL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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