Crude Oil Edges Higher As Traders Focus on Strike in Nigeria
Oil prices edged higher Friday as markets monitored talks between the Nigerian government and labor union officials to end a general labor strike in Africa's largest crude producer.
Light, sweet crude for August delivery on the New York Mercantile Exchange was up 20 cents to $68.85 a barrel by mid-afternoon in Europe.
The contract fell 21 cents Thursday to settle at $68.65 a barrel after market supply concerns were alleviated on reports that the strike had not affected oil exports from Nigeria.
"It is likely that the outlook will remain uncertain as we approach the weekend positioning, making a directional bias difficult," said Olivier Jakob at Petromatrix.
Nigeria's labor unions launched a strike Wednesday aimed at overturning government price increases on gasoline, among other demands that the government already has conceded.
Union leaders said the strike would continue Friday, when they aimed to shut down basic services such as electricity or pipe-borne water - amenities enjoyed by few Nigerians in the vast, impoverished nation.
Despite the breakdown of talks overnight, analysts believe the strike will be over by the end of the weekend, without having affected oil exports from Africa's biggest producer, although some expressed concerns the new government may have given in to union demands too easily.
"This new government has given up so much so quickly that it may be developing a reputation as a soft touch," said Peter Beutel at Cameron Hanover.
"This could come back to haunt it if it plans on any serious reforms for the future in an economy riddled with graft and inefficiency."
Oil receipts account for some 80 percent of Nigeria's total government revenue and the unions are threatening to close the taps of Nigeria's energy industry, the eighth-largest worldwide, sending crude prices toward nine-month highs on international markets.
Nigeria is the third-biggest overseas supplier of oil to the United States.
Continuing to counter developments in Nigeria was the large increase in U.S. crude stocks reported earlier this week.
The U.S. Energy Information Administration said Wednesday that crude inventories jumped by 6.9 million barrels in the week ended June 15. Analysts had expected crude stocks to drop by 150,000 barrels. Gasoline inventories rose by 1.8 million barrels, more than the 1 million-barrel increase expected by analysts surveyed by Dow Jones Newswires.
In other Nymex trading, heating oil futures followed crude higher while natural gas prices slipped.