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The New York Times: Oil Edges Up as Alaska Crude Output Cut Further

EXTRACTS: At least 508,000 bpd, or about a sixth of Nigeria’s output capacity, have been shut in due to militant attacks and pipeline leaks this year, with its largest producer Royal Dutch Shell (RDSa.L) most affected.

Six foreign workers kidnapped in Nigeria were released on Wednesday, though the head of one of the country’s oil workers unions said the unions may pull their members from the oil-producing Niger Delta on safety fears following a spate of abductions.

THE ARTICLE
 
By REUTERS
Published: August 24, 2006
Filed at 3:44 a.m. ET

SINGAPORE (Reuters) – Oil prices edged back up on Thursday as crude production was further curtailed in the largest oilfield in the United States, after sliding nearly 2 percent a day earlier on a surprise U.S. gasoline stock build.

Support also came from the potential for Iran’s nuclear dispute with the West to lead to United Nations sanctions against the world’s fourth largest oil exporter.

U.S. crude for October delivery (CLc1) was up 20 cents at $71.96 a barrel by 0711 GMT, after falling $1.34 or 1.8 percent on Wednesday. London Brent crude (LCOc1) for October rose 25 cents to $72.27 a barrel.

BP (BP.L) said late Wednesday that production at Prudhoe Bay fell to 110,000 barrels per day (bpd), down 90,000 bpd after a technical fault that would last several days. The Alaskan field had previously been running at about half its normal capacity.

The reduced output helped push down U.S. crude oil stocks by 600,000 barrels last week, a smaller-than-expected drop in U.S. inventory data on Wednesday. The latest output loss adds to market worries about real and actual supply disruptions.

“U.S. crude production failed to fully reflect the loss of Alaska’s Prudhoe Bay for the second-straight week,” said JP Morgan.

However, U.S. gasoline inventories posted a surprise 400,000-barrel build as refiners ran harder, easing worries about stocks being depleted by peak northern summer driving demand and pushing NYMEX gasoline futures (HUc1) sharply down on Wednesday.

“The NYMEX unleaded gasoline contract has been flushing dramatically in recent weeks, down $15 plus a barrel so far this month, as length shifts out of the contract,” JP Morgan added.

IRAN ISSUE

Weather forecasters also eased worries over Tropical Storm Debby, the fourth of the 2006 Atlantic hurricane season, which weakened on Wednesday and moved on a path toward Bermuda and away from U.S. Gulf Coast oil production.

Price losses were limited by worries over Iran’s nuclear row, after the United States said on Wednesday that Tehran’s response to incentives proposed by six world powers “falls short” of the conditions set by the U.N. Security Council.

Iran said its reply on Tuesday to the package aimed at ending the dispute contained ideas that would allow serious talks, but showed no sign of agreeing to a key demand to halt uranium enrichment.

The U.N. Security Council has demanded Iran halt its nuclear work by a deadline of August 31 or it could face sanctions, which traders fear could lead Iran to disrupt oil supplies.

U.S. crude prices remain nearly 18 percent up this year on fears over Iran’s supplies and reduced Nigerian output, though prices have fallen back from a record-high of $78.40 in July after a ceasefire between Israel and Lebanon.

At least 508,000 bpd, or about a sixth of Nigeria’s output capacity, have been shut in due to militant attacks and pipeline leaks this year, with its largest producer Royal Dutch Shell (RDSa.L) most affected.

Six foreign workers kidnapped in Nigeria were released on Wednesday, though the head of one of the country’s oil workers unions said the unions may pull their members from the oil-producing Niger Delta on safety fears following a spate of abductions.

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