Oil above $68 after new attack in Nigeria

LONDON - Oil was steady above $68 on Wednesday after a new attack on a Nigerian pipeline illustrated the uphill task the new president faces to restore lost output in the world’s eighth biggest crude exporter.

By (Reuters)

Published: Wed 30 May 2007, 6:57 PM

Last updated: Sat 4 Apr 2015, 8:38 PM

Energy appeared immune to a 6.5 percent drop in China’s main stock index that buffeted other Asian and European markets.

“The stock market impact on Chinese growth is not big enough to influence oil. Nigeria is the thing that everyone is focusing on,” said Barclays Capital analyst Kevin Norrish.

London Brent crude, currently a better indicator of the global market than U.S. oil, was up six cents at $68.19 a barrel by 1038 GMT, after tumbling $1.58 on Tuesday.

U.S. crude was up 28 cents at $63.43.

Royal Dutch Shell said it had begun restoring 150,000 barrels per day (bpd) of crude oil production halted after villagers sabotaged a major export pipeline in Nigeria for the second time this month.

The latest interruption came after the country’s new president Umaru Yar’Adua, who took office on Tuesday, said he would urgently address the crisis in the oil-producing Niger Delta.

Militant attacks have reduced the OPEC member’s output by around a quarter. Worries over supplies of Nigeria’s gasoline-rich crude and over low gasoline stocks in top consumer the United States sent Brent to a nine-month high above $71 last week.

“Market fundamentals are tightening steadily and OPEC production levels are too low versus demand,” Norrish said.

Investors are awaiting the next snapshot of oil demand and inventories in the United States, due on Thursday.

Analysts polled by Reuters forecast gasoline supplies rose last week by 1.2 million barrels after refineries boosted production at the start of the summer driving season..

“The rise in U.S. gasoline stocks barely meets demand or it could be still insufficient as the driving season has already started,” said Keiichi Sano of Sumitomo Corp.

The build would be the fourth consecutive weekly rise, but stocks are well below last year’s levels with peak motoring demand traditionally starting during the Memorial Day weekend.