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Oil prices rise on Nigeria violence, reversing 2-day slide

Oil prices rise on Nigeria violence, reversing 2-day slide

Oil prices rebounded from a seven-month low Wednesday as violence in Nigeria stoked supply concerns.
Early in the day, crude futures fell following comments from Saudi Arabia's ambassador to the U.S. intended to sooth the market, and after U.S. government data showed rising inventories of crude, gasoline and heating oil.
But buyers came back into the market Wednesday afternoon amid reports that armed men attacked a convoy in Nigeria's oil-rich southeastern delta.
Brig. Gen. Alfred Ilogho said the convoy was carrying supplies for Agip, a subsidiary of Italian oil company ENI SpA. He said he had no details on casualties. ENI could not immediately be reached for comment.
Fighting also broke out at a pumping station belonging to a Royal Dutch Shell PLC subsidiary elsewhere in the volatile delta region.
Nigeria's light, sweet crude oil is particularly desirable for the production of transportation fuels and any loss of output has the potential to spook the market. Recent militant attacks on oil facilities have raised "serious concerns about the stability of Nigeria's crude and LNG supplies," Eurasia Group Africa analyst Sebastian Spio-Garbrah said in a report.
Societe Generale's director of commodity strategy Michael Guido said that after dropping by more than $4 a barrel Monday and Tuesday the market had become "oversold." The Nigeria news only magnified technical buying, he said.
Light sweet crude for November delivery rose 73 cents to settle at $59.41 a barrel on the New York Mercantile Exchange. November Brent crude rose 79 cents to settle at $59.22 on London's ICE Futures exchange.
Nymex crude-oil futures are still roughly 25 percent below their July peak of $78.40.
With economic growth slowing and oil supplies rising, energy markets have become less jittery about geopolitical tensions; namely, the diplomatic standoff between Iran and the West over Tehran's nuclear ambitions. For much of the year, fear about potential sanctions against Iran, and possible retaliatory actions by OPEC's No. 2 supplier, had gripped the market.
A mild Atlantic hurricane season has also eased fears of disruptions to Gulf of Mexico oil and natural gas production.
Despite the steep decline in prices, Saudi Arabia's ambassador to the U.S. said he did not expect the Organization of Petroleum Exporting Countries to hold an emergency meeting to discuss prices ahead of its scheduled meeting on Dec. 14, Dow Jones Newswires reported.
Prince Turki said Saudi Arabia's intent was to "bring down prices to reasonable levels."
BNP Paribas Commodity Futures broker Tom Bentz said that while OPEC has not stepped in yet to stem the decline in oil prices, they could before long.
"I don't think they want to see sub-$50 oil," Bentz said. "I imagine you're going to see some OPEC action soon... The question is, will that stop the fall?"
In its weekly report, the Energy Department said U.S. inventories of crude oil rose by 3.3 million barrels last week to 328.1 million barrels, or 6.7 percent above year-ago levels.
Gasoline inventories rose by 1.2 million barrels to 215.1 million barrels, or 9.6 percent more than last year.
Distillate inventories increased by 200,000 barrels to 151.5 million barrels, 18 percent above year ago levels.
In other Nymex trading, heating oil futures rose 2.31 cents to settle at $1.677 a gallon while gasoline futures gained 4.11 cents to settle at $1.4978 a gallon.
Natural gas futures rose 23.6 cents to settle at $5.995 per 1,000 cubic feet.


Updated : 2021-05-16 15:27 GMT+08:00