Monday May 18, 06:05 PM
Oil price hits 58 dollars on Nigeria unrest
LONDON (AFP) - New York crude oil prices hit 58 dollars Monday on escalating unrest in key energy exporter Nigeria, traders said.
New York's main futures contract, light sweet crude for delivery in June, jumped 1.67 dollars to 58.01 dollars a barrel.
Brent North Sea crude for July delivery advanced 1.72 dollars to 57.70 dollars.
"Providing support to prices... has been the deteriorating situation in Nigeria," said Kevin Norrish, oil analyst at Barclays Capital investors in London.
Nigeria's main armed group on Monday said it had ordered a blockade of key shipping channels in a bid to inflict further damage on the energy industry, but the military urged oil firms to ignore the threat.
"We have ordered the blockade of key waterway channels to oil industry vessels both for the export of crude and gas and importation of refined petroleum products," the Movement for the Emancipation of Niger Delta (MEND) said in a statement.
"This means vessels now ply such routes at their risk," it said.
In the past three and a half years, MEND has been behind a series of kidnappings of staff and attacks on oil installations.
Unrest in the region has reduced Nigeria's daily output to 1.76 million barrels compared with 2.6 million barrels in January 2006.
"The potential for disruption of Nigeria's 1.8 million bpd (barrels-per-day) oil production may be a supportive background feature for crude oil prices" going forward, said analyst Brenda Sullivan at the Sucden Financial Research brokerage in London.
A spokesman for Anglo-Dutch oil group Shell (LSE: RDSB.L - news) said the company would continue to protect its workers in the African nation.
"We will continue to monitor the security situation and have taken measures to ensure the safety of our staff and contractors working for us," Precious Okolobo told AFP.
Rabe Abubakar, a colonel in the Nigerian army, meanwhile told AFP that government troops had rescued four Ukrainians abducted last week in the restive region. No group has claimed responsibility for the incident.
Abubakar said in another statement that in an early morning raid on a rebel camp, government troops in Delta state killed an undisclosed number of militants and recovered arms and ammunition.
Analysts said that despite the Nigerian concerns, oil prices remained weighed down by the struggling global economy which has dampened energy demand.
A rally last week that sent prices to six-month peaks above 60 dollars was cut short by indications that the global recession remains far from over.
The 16-nation eurozone economy contracted a record 2.5 percent in the first three months of the year after shrinking 1.6 percent in the last quarter of 2008, the Eurostat agency said last week.
Oil hit record highs above 147 dollars last July before the global financial crisis accelerated in the final months of 2008, pushing the world economy into recession.
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