• Home
• /
• Business

Oil off 6-week low after new Nigeria attack

LONDON - Oil rebounded towards $65 a barrel on Tuesday as fresh attacks on Nigeria’s oil industry interrupted a six-day losing streak that had driven prices to their lowest since March 26.

Militant raids have shut about a quarter of output in Africa’s biggest producer. Fighters from the Movement for the Emancipation of the Niger Delta (MEND) said on Tuesday they had destroyed three major oil pipelines.

The MEND said Agip’s Brass terminal, which normally exports about 200,000 barrels per day (bpd), had been affected. The Italian firm said it had suspended production at two oilfields. Sources at companies due to lift cargoes said they were waiting for word.

London Brent crude, currently seen as more representative of the global market than US oil, was up 51 cents at $64.95 by 1140 GMT after an 87-cent drop on Monday that took six-day losses to nearly 6 percent or $4.

US crude was up 20 cents at 61.67, having hit its lowest since March 22 the previous session.

Olivier Jakob, an analyst at Swiss-based Petromatrix said developments in Nigeria were the market’s main focus.

There had been optimism in some quarters that Nigeria’s presidential election last month would mark the start of a recovery for the country’s oil industry.

“With the negative correction that we had over the last six days, we would expect to see more short covering starting to materialize when/if the attacks are confirmed by the operators,” Jakob said in a research note.

The latest Nigeria unrest comes a day after villagers with machetes and sticks forced Chevron Corp. to shut down an oil production site pumping 42,000 bpd.

Despite unseasonally low gasoline stocks in top consumer the United States ahead of peak summer demand, oil prices had been sliding on the back of rising US crude stocks and the promise of increased refinery motor fuel output.

“There is increasing confidence that crude oil supplies will be sufficient to meet demand in the US summer driving season,” said Commonwealth Bank of Australia in a report.

Weekly US fuel stocks data is due for release on Wednesday. Gasoline inventories were expected to have snapped a 12-week string of draws last week, rising by 100,000 barrels, a preliminary poll of Reuters analysts found. Crude stocks were also expected to have risen again.

Some analysts said oil’s recent slide -- its longest losing run since early September, but not its steepest -- was aided by soaring metals markets, which have captured investor attention and limited any bargain-hunt buying.