LONDON (Thomson Financial) - Oil held onto gains Thursday afternoon, still
supported by supply jitters from Nigeria and geopolitical tension in Iran.
Volumes were light, however, as UK and Japanese markets observed a public
holiday.
"Nigeria is the lingering hotspot the markets will be focussing on," said MF
Global analyst Ed Meir. "Here, the news over the weekend has been mixed;
ExxonMobil said it has restarted 300,000 bpd of Nigerian production out of total
of 800,000 sidelined earlier, but there are reports of fresh violence, as
another pipeline explosion has shut in more oil production," he added.
Fresh militant attacks in Nigeria, Africa's biggest producer, have forced
oil major Shell to shut down more of its oil production.
Nigerian militants attacked an oil ship off the coast of the west African
country and took two people hostage, a military spokesman said Sunday. Shell
accounts for about one-half of Nigeria's 2.1 million barrels-per-day output.
"A few oil delivery lines are affected and some oil has spilled into the
environment," a Shell spokesman said.
At 1:29 p.m., New York-traded West Texas Intermediate crude for June
delivery was up 33 cents to $116.65 a barrel.
In London, Brent crude for June delivery was up 19 cents at $114.75. Trading
volume in London was light as the United Kingdom enjoys a bank holiday.
Elsewhere, prices were supported by tensions between Iran and the West. Iran
said Monday it will reject any offer that violates its right to the full nuclear
fuel cycle after world powers said they had prepared a new package to end the
atomic crisis. Oil players fear the ongoing tension could result in Iran using
oil as a bargaining chip.
Oil rose 3 percent Friday on better-than-expected employment figures in the
United States which raised hope the world's biggest economy might avoid a
recession. The bombing by Turkish warplanes of Kurdish rebel bases inside Iraq
and the strengthening of the U.S. dollar against the euro also supported oil
prices.
Meanwhile, recent positive sentiment out of the United States has improved
the demand prospects for most commodities.
"The market is also obviously responding to the U.S. non-farm payrolls
report that suggests that the recession here is less severe than had been feared
and thus suggesting that hopes for reduced U.S. demand are ill-advised," said
Dennis Gartman, editor of The Gartman Letter.
anealla.safdar@thomsonreuters.com
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