Melbourne, June 25: Oil rose above $69 a barrel on Thursday after Nigeria’s main militant group shut down one of Royal Dutch Shell’s pipeline junction points, heightening concerns about supplies from the region.
U.S. crude futures for August gained 74 cents to $69.41 a barrel by 1210 GMT. London Brent crude rose 88 cents to $69.21.
In the latest in a string of attacks in Nigeria, Africa’s biggest oil producer, the Movement for the Emancipation of the Niger Delta (MEND), said it had sabotaged the Billie-Krakama pipeline in Rivers State, which supplies one of the country’s main export terminals.
Attacks from MEND have forced foreign oil companies, including U.S. oil major Chevron and Italy’s Agip, to shut at least 133,000 barrels per day of oil production in the last month.
Shell said it had shut down one of its pipeline junction points on Thursday but declined to say whether any oil production had been affected.
Analysts said the effect on prices had been subdued with plenty of spare supply capacity available around the world, as the global recession has cut demand for oil.
“The Nigerian attacks have definitely been supportive, but the impact is less in the current economic environment as there’s plenty of spare capacity in the oil industry right now,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said.
“When we were rallying towards $150 a barrel last summer a small sneeze in Nigeria would send the market rallying at least $2 a barrel. There’s less of a geopolitical premium in prices now.”
Falling demand for oil sent oil prices crashing from record highs close to $150 a barrel last July towards $30 a barrel at the turn of the year. Since mid-April, however, prices have risen sharply on prospects for an economic recovery.
A Reuters poll of industry analysts showed oil prices are expected to average more than $70 a barrel in 2010, compared with the latest forecast average of $56.59 for this year.
RISING INVENTORIES
On Wednesday, U.S. government data showed stocks of gasoline in the world’s largest energy consumer rose 3.9 million barrels last week, exceeding analysts’ predictions. Stocks of distillates — such as diesel and heating oil — have risen to 10-year highs due to the recession.
But prices took support from a large drop in stockpiles of crude oil, which declined by 3.8 million barrels last week.
Production cuts from OPEC are expected to slowly drain global stocks of crude oil towards the end of this year, although economists have warned any subsequent rise in oil prices could derail any economic recovery.
Weakness in the dollar also supported prices on Thursday as it slipped towards $1.40 against the euro. A weaker dollar tends to boost buying as it makes commodities priced in the greenback cheaper for holders of other currencies.
—Agencies