Oil Runs Up 3% On Nigerian Attacks

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The price of oil is up today on news of Nigerian militants attacking an off shore oil rig.

Dirk Lammers AP– Oil prices jumped above $71 a barrel Monday, as Nigerian militants damaged and partly shut down an offshore oil platform belonging to Royal Dutch Shell PLC.

Benchmark crude for August delivery gained $2.11 at $71.27 a barrel on the New York Mercantile Exchange.

Shell spokesman Precious Okolobo confirmed the attack and partial shutdown. Previous militant attacks on infrastructure in Nigeria’s restive southern oil region have trimmed output in Africa’s biggest crude producer by about 25 per cent.

Alaron Trading Corp. analyst Phil Flynn said China’s plans to increase its strategic crude oil reserves by 60 per cent should provide the market with some long-term support.

“If China continues to strengthen its reserve then oil will be bought on pullbacks,” Flynn wrote in his morning report.

Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said a barrel of oil has been hovering around where it started the month, and he expects the trend of sideways trading will likely continue. Volume is typically low in the days leading up to a holiday weekend.

Monday’s 3 per cent jump in oil came despite a report from the International Energy Agency predicting a slower rebound in global energy demand.

The IEA said demand is likely to grow by an average of 0.6 per cent annually over the 2008-2014 period. It would reach 89 million barrels a day by 2014 assuming the International Monetary Fund’s current forecast of a return to 5 per cent annual economic growth by 2012, the agency said.

The IEA report drove down natural gas prices, as the Paris-based agency forecast that demand this year will drop for the first time in 50 years. Natural gas for July delivery fell 12.7 cents to $3.978 per 1,000 cubic feet in Nymex trading.

Meanwhile, retail gasoline prices, which fell for the first time in nearly two months a week ago, continued their pullback as the average price of a gallon of regular unleaded gas fell overnight by four-tenths of a cent to $2.639 (70 cents a liter), according to AAA, Wright Express and Oil Price Information Service.

That’s still about 15 cents a gallon higher than last month, but $1.44 cheaper than this time last summer.

Oil prices, which yo-yoed around $70 a barrel last week, have doubled since March.

Investors will watch economic data this week, including the labour Department’s June unemployment report. The jobless rate hit a 25-year high of 9.4 per cent in May, jumping from 8.9 per cent in April.

The latest indicators of consumer confidence and manufacturing activity will also be released.

In other Nymex trading, gasoline for July delivery gained 7.49 cents at $1.9490 a gallon and heating oil rose 5.71 cents to $1.7874 a gallon.

In London, Brent prices rose $1.92 to $70.84 a barrel on the ICE Futures exchange.

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