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The New York Times: Oil Hovers At $70 as Middle East Cyclone Fears Ease

EXTRACT: Royal Dutch Shell has resumed normal crude oil production at its 150,000-bpd Bomu pipeline hub in Nigeria, which feeds the Bonny Light crude terminal, after the facility was shut down by local protesters last week, it said on Monday. But analysts saw little to suggest an end to 18 months of violence that has shut about a third of Nigeria’s oil output.        

THE ARTICLE

By REUTERS
Published: June 4, 2007
Filed at 11:30 p.m. ET

SINGAPORE (Reuters) – Oil prices eased on Tuesday, as Middle East cyclone fears waned, but concerns over gasoline supply in the United States kept crude above the $70 mark.

London Brent crude shed a cent to $70.39 a barrel by 0327 GMT, after climbing $1.33 on Monday on concerns the storm could disrupt shipping and output in the Middle East.

U.S. light crude fell 18 cents to $66.03 a barrel.

Top exporter Saudi Arabia said its main oil producing region would not be affected by a storm nearing the Arabian Peninsula, while shipping agents said no official warnings had been issued for fellow OPEC member the United Arab Emirates.

“The cyclone will not have a bigger impact,” said Tetsu Emori, analyst at Mitsui Bussan Futures in Tokyo.

Oil producer Oman still put its army and police on high alert and its weather service warned of winds 185-205 km (114-128 miles) per hour causing high waves. Oman produces 715,000 barrels per day (bpd) of oil, versus Saudia Arabia’s near 9 million bpd.

Dealers will remain on alert for any sign of hurricanes in the Gulf of Mexico after the Atlantic storm season began on June 1, although the first of the season — Tropical Storm Barry — eased by the weekend, pouring rain on Florida.

Traders were also waiting for the latest snapshot of U.S. inventories and demand, due in government data on Wednesday, as refinery capacity is struggling to return from maintenance and glitches after the start of peak summer fuel demand.

Analysts forecast gasoline stocks to have risen 1.4 million barrels last week, the fifth consecutive rise.

“Gasoline is a big concern and problems with U.S. refineries. Imports are going to have to pick up, then refineries around the world will go up, pushing up crude demand, with OPEC holding production steady,” said Tony Nunan, manager of risk management at Mitsubishi Corp.

Investors are also worried about Tehran’s atomic dispute with the West, with Supreme Leader Ayatollah Ali Khamenei saying on Monday that Iran, the world’s fourth-biggest oil exporter, would not retreat from the “field of danger” to protect its right to develop nuclear technology.

In fellow OPEC member Nigeria, militants have called a one-month truce in attacks on oil installations in the Niger Delta.

Royal Dutch Shell has resumed normal crude oil production at its 150,000-bpd Bomu pipeline hub in Nigeria, which feeds the Bonny Light crude terminal, after the facility was shut down by local protesters last week, it said on Monday.

But analysts saw little to suggest an end to 18 months of violence that has shut about a third of Nigeria’s oil output.

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