Monday May 18, 09:17 PM
Oil price hits 59 dollars on Nigeria unrest
NEW YORK (AFP) - New York crude oil prices hit 59 dollars Monday, driven by hopes of a quick economic recovery in the United States and escalating unrest in key energy exporter Nigeria.
New York's main futures contract, light sweet crude for delivery in June, jumped 2.69 dollars from its closing price on Friday to end at a six-month high of 59.03 dollars a barrel.
Brent North Sea crude for July delivery advanced 2.47 dollars to 58.47 dollars in London.
"Notwithstanding our own concerns about the consumer, there is still a good degree of optimism after the recent (Wall Street) rally that the economy is headed for better times soon as the fiscal stimulus works its way further through paychecks and local economies," said Patrick O'Hare at Briefing.com.
The oil gains came in tandem with a strong US stock rally fueled by hopes for recovery in the recession-struck economy.
Analysts said one trigger for the higher oil prices Monday was escalating violence in Nigeria, where its main armed group said it had ordered a blockade of key shipping channels in a bid to inflict further damage on the energy industry. The military however urged oil firms to ignore the threat.
In the past three and a half years, the Movement for the Emancipation of Niger Delta (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.
A rally last week that sent prices to 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.
"Sentiment and the markets are fickle these days. It does not take much of a data point in either direction for markets? obsessions to turn gleeful or despondent," said John Kilduff of MF Global.
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