Friday June 26, 01:24 PM
Oil above $71 on fresh Nigeria pipeline attack
LONDON (AFP) - Oil prices rose on Friday as Nigeria's main rebel group said it had launched a fresh attack against an oil installation in the south of the country.
Traders said crude futures were also boosted by a weaker dollar which tends to push up demand for the commodity.
New York's main futures contract, light sweet crude for delivery in August, climbed 43 cents to 70.66 dollars a barrel.
In London, Brent North Sea crude for August rose 40 cents to 70.18 dollars.
"While the markets are adding a geopolitical risk premium for OPEC member Nigeria's supply concerns, it is less than what would have been in other market conditions amid the current large level of commercial stocks and spare capacity at the moment," said Nimit Khamar, energy analyst at Sucden brokers in London.
"However, market participants remain on edge as it appears unlikely that OPEC would increase production in order to compensate for Nigeria's loss of supply."
Nigerian rebels attacked another oil installation in the country's main producing region despite President Umaru Yar'Adua's offer of an amnesty.
Militants from the Movement for the Emancipation of the Niger Delta (MEND) said in a statement that late on Thursday they launched the attack after an army raid on a village that came despite the amnesty offer.
A spokesman for the Anglo-Dutch oil giant Shell (LSE: RDSB.L - news) told AFP that the facility was operated by local company Sahara Oil but was close to a Shell installation.
MEND on Thursday carried out a pre-dawn attack against Royal Dutch Shell (Amsterdam: RDSA.AS - news) facilities in a warning to Russia not to invest in the country's oil and gas industry made during a visit to Nigeria by Russian President Dimitry Medvedev.
Yar'Adua on Thursday offered Niger Delta militants the amnesty to try to halt attacks on the oil industry that have cut the country's production by a quarter over the past three years.
MEND, which regularly attacks energy facilities, demands a fairer share of oil wealth for locals in the Delta region. Its activities have badly hit Nigeria's oil output, cutting daily production from around 2.6 million barrels in 2006 to some 1.8 million barrels now.
Dealers said oil was also finding support also a weaker dollar, which makes dollar-priced oil cheaper to holders of stronger currencies, encouraging demand and leading to higher prices.
Crude fell mid-week as the dollar strengthened -- making oil more expensive for foreign buyers --- and after the United States reported mixed energy inventory data which traders said was supportive overall.
The US Department of Energy on Wednesday said that inventories of gasoline (petrol) jumped 3.9 million barrels in the week ending June 19, compared to expectations for a gain of one million barrels.
Crude stockpiles, however, dropped by 3.8 million barrels, steeper than the 1.3 million barrels expected.
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