Oil pushes past 72 dollars on Nigerian unrest

Tuesday June 30, 2009

SINGAPORE: Oil prices rose above 72 dollars in Asian trade Tuesday as tensions in Nigeria, a key African crude producer, rattled investor sentiment, analysts said.

New York's main contract, light sweet crude for August delivery, put on 1.08 dollars to 72.57 dollars.

Brent North Sea crude for August delivery leaped 1.21 dollars to 72.20.

Nigerian rebels said Monday they raided a Shell facility and killed at least 20 soldiers in a gun battle, a claim denied by security forces.

A Shell spokesman, however, confirmed the raid and said production had been affected.

"Reports of another Nigeria attack seems to give the market a boost, as well as a report that China is going to add to its strategic petroleum reserves," said Phil Flynn of Alaron Trading.

The Movement for the Emancipation of the Niger Delta (MEND) militants said the Shell Forcados off-shore platform in Delta state was burning "after a massive explosion" following their 2:30 am (0330 GMT) raid.

Monday's raid was just the latest in a series that have targeted Shell facilities this month and which have continued despite last Thursday's offer from President Umaru Yar'Adua of an amnesty for the militants.

Weekend reports that China planned to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years also boosted prices, Flynn said.

"If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support," he said.

Oil prices have steadily gained ground in recent weeks on hopes of a global economic recovery and persistent weakness in the US dollar which makes dollar-priced crude cheaper for holders of foreign currencies.



(AFP)