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Oil Prices Rebound on Nigeria Unrest
POSTED: 11:13 a.m. EDT, May 4,2007

World crude prices rose Thursday as unrest escalated in Nigeria, Africa's biggest oil producer.

In London, the price of Brent North Sea crude for June delivery climbed 59 cents to 66.84 dollars per barrel in electronic trading.

New York's main oil futures contract, light sweet crude for delivery in June, rose 35 cents to 64.03 dollars per barrel in electronic deals before the official open of the US market.

Crude prices had dropped on Wednesday, despite a decline in US gasoline or petrol reserves, as traders bet on a build-up in stocks following improvements in refining output.

Gasoline stockpiles are in focus ahead of the peak-demand holiday driving season in the United States, which starts at the end of May.

But on Thursday the market's attention was more geared to Nigeria, after news that armed men had overnight abducted at least 12 foreigners in the country's south during the latest spate of violence to hit the region.

"Crude futures were higher (on Thursday), underpinned by fresh concerns about violence in Nigeria," Sucden analyst Michael Davies said in London.

The latest attacks, for which no group has claimed responsibility, follow a kidnapping Tuesday in which six expatriates were seized from a floating oil vessel by Nigeria's most high profile armed group, MEND.

Nigeria is the world's sixth-biggest oil exporter, but its output is being severely hit by frequent kidnappings of foreign oil workers and attacks to pipelines.

Meanwhile regarding the supply situation in the United States, the world's biggest consumer of energy, the US Department of Energy (DoE) said Wednesday that its gasoline reserves had fallen by 1.1 million barrels to 193.1 million last week.

Despite a smaller-than-expected drop, it was the 12th weekly decline in a row for gasoline stocks, which have fallen by 34.1 million barrels since the start of February.

The DoE meanwhile added that American refineries ratcheted up their gasoline production last week by a half point from the prior week, to 88.3 percent.

"There is an indication that refinery utilisation (rates) in the US are picking up and that would mean that gasoline supplies get relieved somewhat," said Victor Shum, an analyst with energy consultancy Purvin and Gertz.

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