Confusion over the names of two similar-sounding African countries may have helped boosted oil prices to near $ 80 a barrel this week as traders rushed to buy oil after reports of a military coup.A Reuters reporter received a flustered phone call from a hedge fund partner who had heard animated discussion about an incident in the market in Nigeria, only to traders had muddled up by realize that Africa's biggest oil producer with its neighbor Niger.
"Markets took off at around the same time a Reuters story came out about gunfire erupting in the Niger capital in apparent coup bid on, mistaken by many as being in Nigeria, 'said Tom Bentz, analyst at BNP Paribas Commodities.
Reuters first broke news of heavy gunfire and a coup in Niger's capital, Niamey, on Thursday. Prices jumped to a one-month high of $ 79.29 a barrel during the day.
While a coup in Nigeria would almost certainly rock crude oil benchmarks, a coup in Niger - which has yet to produce oil - would almost certainly not, barring linguistic confusion.
Traders said that oil to market the game version of 'Chinese whispers' rather than poor geography may have been behind the jump, as some scrambled to call the market amid mounting confusion over the titles of the two countries which share the same first five letters. The fact that Nigeria's main oil producing region is called the Niger Delta and is an area of political unrest that is probably stoked the rumors. A popular trading mantra is "buy the rumor, sell the fact".
But far from being a costly mistake, the decision to buy oil on the Niger coup was a flash of fortuitous genius for some as oil prices continued rising afterwards to within cents of $ 80 a barrel on Thursday, spurred by other factors such as tension over Iran's nuclear programs and a weaker dollar.
TAGS. Africa | coup | currencies | dollar | Markets | Niamey | Niger | Nigeria | oil | oil prices
