Oil falls after Nigeria hostage release

LONDON - Oil prices eased on Thursday after Nigerian militants freed several foreign workers seized from an offshore oilfield.

By (Reuters)

Published: Thu 3 May 2007, 9:13 PM

Last updated: Sat 4 Apr 2015, 10:55 PM

London Brent crude, currently seen as the most representative of global oil prices, traded 46 cents lower at $65.79 a barrel by 1409 GMT, after dropping 75 cents on Wednesday. US crude fell 81 cents to $62.87.

Prices had risen earlier in the session after unidentified gunmen took 18 foreign workers in three attacks in Nigeria’s oil-producing Niger Delta region. [nL03396127

The Movement for the Emancipation of the Niger Delta (MEND) said it has since freed eight of the workers.

Violence in the world’s eighth-largest oil exporter has caused prices to soar in the past, but analysts believe the region’s volatility has already been priced into the market.

“This news has not registered as it might have at some other time, showing participants’ willigness to shed length at these price levels,” said John Kilduff of Man Financial.

MEND said the recent kidnappings should serve as a warning to foreign companies not to return to oifields previously attacked by the group.

Royal Dutch Shell said on Thursday it was preparing to restart operations at its 380,000 bpd Forcados oilfields, shut for more than year due to security concerns. But the company declined to provide a specific date and many analysts have raised doubts about its resumption.

“We remain sceptical that a sustainable increase in Nigerian production can actually be achieved,” said Kevin Norrish of Barclays Capital.

Militant attacks, which have increased sharply in the past year, have shut output of about 600,000 barrels per day, or a fifth of production capacity.

Gasoline futures in New York pulled back after gains in recent weeks that have supported crude oil prices, as a likely recovery in refinery operations in coming weeks could reverse the declines caused by plant shutdowns.

In Asia, Exxon Mobil said it had shut a 115,000 barrels per day (bpd) crude unit at its giant Singapore refinery indefinitely as a result of a fire in a related unit, threatening to tighten Pacific Basin gasoline supplies.