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Bloomberg: Oil Rises on Threat of Violence in Nigeria, Drop in OPEC Output

By Eduard Gismatullin

April 20 (Bloomberg) — Crude oil rose on speculation violence in Nigeria will hurt the country’s exports and supplies from OPEC will decline.

Presidential elections are being held tomorrow in Nigeria, Africa’s largest oil producer, where militant attacks have already cut about a quarter of crude output. Exports by the Organization of Petroleum Exporting Countries may fall 0.4 percent in the month ending May 5, according to Oil Movements, a consulting firm.

Oil prices “increased before the weekend because of elections in Nigeria,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. OPEC “will wait and see how demand for crude turns out. They seem to be following the cuts they promised.”

Crude oil for May delivery rose as much as $1.02, or 1.7 percent, to $62.85 a barrel on the New York Mercantile Exchange. The contract, which expires today, was at $62.70 at 1:06 p.m. London time. The more-active June contract rose 31 cents to $63.63.

A Nigerian navy ship patrolling near an oil rig was attacked by militants yesterday, said Guy Cantwell, a spokesman for Transocean Inc., the rig’s owner. The vessel was supporting a rig drilling for oil off the Nigerian coast. All the rig’s crew are “safe and accounted for,” Cantwell said.

Nigerian Energy Minister Edmund Daukoru said this week oil production in the western delta region will probably resume next month. Oil from that part of the delta feeds the Forcados export terminal operated by Royal Dutch Shell Plc’s Nigerian venture.

`Quite Turbulent’

Shell “will wait until elections are finished,” Saltvedt said. “You wouldn’t start now, when it still quite turbulent.”

Militants in Nigeria’s delta region will continue their campaign for control of local resources even after tomorrow’s presidential election, said Jomo Gbomo, a spokesman for the Movement of the Emancipation of the Niger Delta.

Brent crude for June settlement rose as much as 60 cents, or 0.9 percent, to $66.54 a barrel in electronic trading on the ICE Futures exchange. It was trading at $66.37 at 1:07 p.m. in London.

OPEC will load 24.1 million barrels a day onto tankers in the month ending May 5, compared with 24.2 million barrels a day in the month ended April 7, Oil Movements said.

The 10 OPEC members that are subject to production quotas agreed to a 1.7 million-barrel-a-day cutback in output at meetings in October and December to keep oil prices around $60 a barrel.

OPEC’s basket price, a weighted average of 11 blends produced by OPEC nations, rose 1 cent to $61.85 a barrel yesterday.

Increase Production

Crude oil demand may climb as U.S. refiners ramp up to produce gasoline for the coming summer. Refineries operated at 90.4 percent of capacity last week, the highest since Jan. 5, the U.S. Energy Department said April 18.

“Owing to ongoing robust demand despite higher retail prices, forward cover for gasoline fell by 0.3 days to 21 days, the lowest level since early September 2005,” said Makoto Takeda, an energy analyst at Bansei Securities Co. in Tokyo.

The average U.S. pump price for regular gasoline rose 12 cents to $2.863 a gallon yesterday compared with a month ago, according to the American Automobile Association, the nation’s biggest motoring club. Prices rose above $3 a gallon the past two summers.

Belgian oil workers may call a strike at the four main refineries in Antwerp by next week, after talks on a new two-year labor agreement fell apart, Herman Baele, the leader of Belgium’s petroleum union, said in a phone interview from Brussels today.

Total SA, Exxon Mobil Corp. and Petroplus Holdings AG operate four refineries around Antwerp, with combined capacity of more than 600,000 barrels a day.

Texas Incident

BP Plc, Europe’s second-largest oil company, said today about 90 workers at its Texas City, Texas, refinery were taken to a hospital last night for medical observation, complaining of eye irritation and nausea.

The contractors were carrying out work on the refinery’s Pipestill 3B unit, which hasn’t been operating since Hurricane Rita in 2005, according to BP spokesman Robert Wine. The refinery is “operating normally,” Wine said.

The spread between May contracts for West Texas Intermediate, the benchmark crude traded in New York, and September contracts narrowed to $3.82 a barrel from $4.57 yesterday. The difference gives an indication of relative value for oil at the beginning of the peak gasoline demand season and the end.

“WTI front timespreads have continued to improve since the collapse of 10 days ago,” Olivier Jakob, the managing director at Zug, Switzerland-based Petromatrix Gmbh, said today in a report.

Expressed in U.S. dollars, the price of WTI has fallen about 13 percent in the past 12 months. Oil has dropped about 22 percent in euros, 23 percent in British pounds and 12 percent in yen.

To contact the reporter on this story: Eduard Gismatullin in London at [email protected]

Last Updated: April 20, 2007 08:20 EDT

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