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Bloomberg: Oil Trades Little Changed After Falling on Nigeria Uncertainty

By Gavin Evans and Hector Forster

June 22 (Bloomberg) — Crude oil was little changed in New York after three days of declines on doubts strikes in Nigeria have halted exports from Africa’s largest producer.

Oil workers left Nigeria’s export terminals yesterday in the second day of a general strike protesting an increase in domestic fuel prices. Royal Dutch Shell Plc is working to minimize the impact of the strike on the company’s Nigerian operations, spokesman Precious Okolobo said yesterday.

“There are conflicting reports that supplies are still flowing and really nobody knows,” said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California.

Crude oil for August delivery was at $68.64 a barrel, down a cent, in after-hours electronic trading on the New York Mercantile Exchange at 1:50 p.m. in Singapore.

The contract fell 21 cents, or 0.3 percent, to $68.65 a barrel yesterday. Prices jumped 60 cents in the first 12 minutes of floor trading to reach a nine-month high of $69.88.

“The market anticipated the Nigeria strike may end soon, and with the large build in oil inventories last week, prices declined,” said Makoto Takeda, an energy analyst at Bansei Securities Co. in Tokyo. “However there’s still the risk of more attacks in the Niger Delta, so concerns remain.”

Rising U.S. oil inventories capped New York oil futures the past 10 weeks, discounting them against the Brent benchmark, which breached $70 a barrel in mid-May.

Brent crude oil for August settlement was at $70.25 a barrel, up 3 cents, on the London-based ICE Futures exchange at 1:43 p.m. Singapore time. It fell 20 cents, or 0.3 percent, to $70.22 yesterday.

Brent Premium

Brent futures, the European benchmark, yesterday traded at the lowest premium since March to the West Texas Intermediate in New York. The difference, or spread, between Brent and WTI narrowed to $1.57 yesterday from a record $6.54 on May 24. The spread was at $1.66 today.

“Stockpiles of West Texas falling in Cushing led to the narrowing premium,” Bansei’s Takeda said.

Supplies at Cushing, Oklahoma, fell 484,000 barrels last week, the Energy Department reported.

U.S. oil supplies unexpectedly jumped 6.9 million barrels 349.3 million last week, a nine-year high, according to Energy Department data. Fires and breakdowns cut refinery operating rates for a fourth week and reduced demand for crude.

Gasoline for July delivery was at $2.246 a gallon after rising 0.8 percent to $2.2467 yesterday. A June 20 Energy Department report showed U.S. fuel stockpiles rose a seventh week even as operating rates declined.


Nigeria, which pumps low-sulfur oil favored by refiners for gasoline production, was the fourth-largest source of U.S. oil imports in the first four months of the year, according to department data.

Daily output in the West African nation plunged a fifth the past 18 months because of militant attacks and hostage takings.

Oil loadings continued yesterday, Reuters reported, citing oil and shipping company officials. Water and power supplies may be cut today as the nation’s main unions toughen their stance with the government, Agence France-Presse reported.

“Nigeria is an ongoing problem,” Bill O’Grady, director of fundamental futures research at A.G. Edwards & Sons in St. Louis, said yesterday. “When isn’t Nigeria facing a crisis? Peace and quiet would be a real surprise.”

To contact the reporters on this story: Gavin Evans in Wellington at ; Hector Forster in Tokyo at

Last Updated: June 22, 2007 01:53 EDT


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