U.S. Oil Rises Above $69 Due to Planned Strike in Nigeria
U.S. oil rose above $69 on Tuesday due to a planned strike in Nigeria that could further hobble output in the world's eighth-biggest crude oil exporter.
The planned protest over fuel price increases is due to start on Wednesday and comes after more violence flared in the oil-producing Niger Delta at the weekend. The dispute poses a challenge to newly inaugurated President Umaru Yar'Adua.
U.S. light sweet crude for July delivery moved higher. The contract had risen $1.09 to $69.09 on Monday, the fourth day of a rally that has lifted prices by nearly $4.
London Brent crude for August fell. It touched an intra-day peak of $72.25 on Monday, its highest since August 28.
"At the moment it's all about what's happening in Nigeria, the potential for a real strike there is helping prices up," said Andrew Harrington, analyst from ANZ Bank in Australia.
Nigerian unions have said they will start an indefinite general strike from Wednesday that will include the oil sector.
Armed militants stormed two Western oil facilities in the Niger Delta in recent days, cutting a further 82,000 barrels per day (bpd) of output in Africa's biggest producer and taking total shut production to some 756,000 bpd.
Analysts said other factors were also at play.
A strike threat in Brazil that could cut output at state-run oil company Petrobras was weighing on investors' minds.
"Also, U.S. gasoline continues to underpin crude prices as refiners struggle to keep up with strong demand across the driving season. And finally, speculators on the NYMEX have increased net long positions, providing additional support," Citigroup said in a research note.
"Meanwhile there is lower OPEC supply and tight spare capacity ahead of stronger global refinery runs in the third quarter," said BNP Paribas analyst Harry Tchilinguirian.
Call for More Oil
The head of the International Energy Agency, representing the interests of 26 consumer nations, urged OPEC to raise production to increase oil supplies.
"They need to increase output as soon as possible," Claude Mandil told Reuters.
Barclays Capital technical analysts said prices appeared to be resuming an upward march that has lifted oil from around $50 in January. "(There are indications) the uptrend is resuming after a period of range trading," they said in a research note.
Weekly U.S. oil inventories data due on Wednesday will also influence market direction in the short term.
Analysts expect gasoline and distillate stockpiles to have risen from last week as refinery operations recover from unseasonably low level, according to a preliminary poll.
Crude supplies were seen marginally higher.
Violence in the Gaza Strip has also rattled traders, although analysts said there was little indication of the power struggle spilling over to neighboring oil-producing countries.
U.S. crude hit a record high of $78.40 a barrel nearly a year ago on fears that fighting between Israel and Lebanese Hezbollah guerrillas could spread to Middle East oil producers.
OPEC member Iran said it wants a price that preserves the producer group's market share and oil income. Iran's OPEC governor said in remarks published on Tuesday that a price below $55 will hurt oil investment and above $75 will change consumers' energy policy.