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Bloomberg: Oil Is Little Changed, Near Three-Week High, on Nigerian Unrest

By Eduard Gismatullin

April 24 (Bloomberg) — Crude oil was little changed, trading near a three-week high in New York, on concern conflict in Nigeria would disrupt supplies from Africa’s largest producer.

At least six people were killed in post-election violence in Port Harcourt, the heart of the oil-rich Niger delta. Unrest in the region has cut Royal Dutch Shell Plc’s production by almost half in Nigeria, the fifth-largest supplier of crude to the U.S.

“I think the consequences of the elections won’t be extreme,” said Wolfgang Kraus, chief energy and commodities trader at BayernLB in Munich. “The situation in Nigeria has been turbulent for many years.”

Crude oil for June fell 8 cents to $65.81 a barrel in after- hours electronic trading on the New York Mercantile Exchange at 12:40 p.m. in London. The contract rose as high as $66.20 earlier, its highest since April 2.

U.S. crude oil stockpiles probably fell 1.4 million barrels in the week ended April 20 from 332.4 million barrels the week before, according to the median forecast of 12 analysts surveyed by Bloomberg News before a weekly government report on U.S. petroleum supplies, due tomorrow. Supplies probably fell as refiners made more gasoline to meet summer demand.

Brent crude oil for June settlement gained 20 cents to $68.35 a barrel in electronic trading on the ICE Futures exchange at 12:40 p.m. in London. The grade is the benchmark for two-thirds of the world’s oil, including Nigerian blends such as Bonny Light and Escravos.

Nigerian Elections

Nigeria’s ruling-party candidate, Umaru Yar’Adua, won the country’s April 21 election by a 4-to-1 margin over his nearest rival. The vote was marred by irregularities, according to local and international monitors.

Shell’s Nigerian venture will restore by the end of May production shut by militant violence in the Niger delta, Energy Minister Edmund Daukoru said April 18. Nigeria has lost a quarter of its output following attacks that began more than a year ago.

“Elections in Nigeria and strikes at refineries in Europe led to increased concern about fuel supplies,” said Kazuhiko Saito, a commodity strategist at Interes Capital Management in Tokyo.

Belgian workers at four refineries in Antwerp are ready to strike May 9 for higher salaries and bonuses, their union said last week. The plants can process more than 600,000 barrels a day.

Europe accounted for more than 70 percent of 31.7 million barrels of gasoline and blending components the U.S. imported in January, according to Energy Department data.

U.S. Refineries

U.S. refineries probably operated at 90.9 percent of capacity, up 0.5 percentage point from the week before, according to the Bloomberg News survey. Refinery maintenance occurs in February and March as plants switch from making heating oil to gasoline.

“Before the beginning of the driving season in the U.S., stockpiles begin to recover,” BayernLB’s Kraus said. “There are still more refineries undergoing maintenance than usual for this time of the year.”

U.S. gasoline stockpiles probably fell by 350,000 barrels last week, according to the analyst survey. They dropped by 2.7 million barrels the week before to 197 million, 5.5 percent less than the five-year average for the period, according to Department of Energy data. Supplies fell partly because of refinery outages in the U.S.

ConocoPhillips, the second-largest U.S. refiner, yesterday said a malfunction in a sour water stripper led to emergency flaring at its plant in Sweeny, Texas.

BP Plc, Europe’s second-largest oil company, said its Whiting, Indiana, refinery has cut production to about half its capacity, or 200,000 barrels, after a hydrotreating unit failed in March.

BP also said today oil and gas production declined 3 percent from the year earlier quarter to 3.912 million barrels a day. It was the seventh consecutive quarter in which production fell from the year before.

Expressed in U.S. dollars, West Texas Intermediate, the benchmark crude traded in New York, has fallen about 10 percent in the past 12 months. Oil has dropped about 18 percent in euros, 19 percent in British pounds and 7 percent in yen.

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

Last Updated: April 24, 2007 07:49 EDT

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