Oil Moves Higher Ahead of Holiday Weekend
U.S. oil futures rose more than a dollar today to end above $59 as traders covered short positions ahead of a holiday weekend, the United States warned of more unrest in OPEC member Nigeria and as refinery snags helped support refined products, traders and analysts said.
Crude reversed earlier losses caused by milder U.S. weather to settle up $1.40 at $59.39.
The warning from the U.S. consulate gave no details on where the next attacks could occur, but said they could include expatriate workers.
"The recent strength may be related to Nigeria, but prices could weaken by the close in view of the likely warmer weather," said Christopher Bellew, a broker at Bache Financial in London.
Violence by militants and criminal groups has escalated in the Niger Delta over the past year, and kidnappings of foreign workers have become an almost weekly occurrence in the main delta city of Port Harcourt.
Seven foreign nationals are being held and Nigerian oil production is still down by a fifth since a series of militant attacks on Western oil facilities last February.
Besides the warning on Nigeria, support for prices also came from outages at refineries in North America and covering of short positions before the three-day U.S. weekend.
A fire at the crude distillation unit at Imperial Oil Ltd.'s 118,000 barrel per day (bpd) refinery in Nanticoke, cut output, although the amount of lost output was not known yet.
Floor trading on NYMEX will be shut on Monday for the Presidents' Day holiday. Electronic trade will be open.
Oil dipped earlier on Friday as some investors focused on forecasts for coming milder weather in the United States, the world's top energy consumer, that would curb heating demand.
Even a return to icy weather would give prices only a limited boost before the arrival of spring, when fuel demand eases, analysts said.
"The bottom line is, whether it's sooner or later, we are not very far away from losing price support from the weather," said Mike Wittner of investment bank Calyon in London.
Oil sank to a 20-month low of $49.90 on Jan. 18 as mild weather curbed heating oil demand in the United States. Prices recovered to $60 when the winter turned cold this month.
The National Weather Service eight-to-14-day forecast on Wednesday called for above-normal temperatures for most of the eastern half of the United States, prompting expectations among
some traders the worst of winter may be past.
Prices slipped earlier this week after the latest report on U.S. fuel supplies showed inventories of distillates, which include heating oil, fell by a less-than-expected 3 million barrels last week.