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Oil Jumps 4.8% to $59.03; OPEC Cuts Unlikely


Crude-oil futures rallied back above $59 a barrel, reflecting uncertainty over supply as the army in Nigeria battled militants in the oil-rich African nation.

Light, sweet crude for June delivery rose $2.69, or 4.8%, to settle at $59.03 a barrel on the New York Mercantile Exchange on Monday. The contract expires today.

Despite soft world demand and above-average quantities of oil parked inside storage tanks, traders looked to fighting in the Niger Delta and drove up prices as they fretted about supply.

[nigeria ]Associated Press 

Rilwanu Lukman, Nigeria’s minister of petroleum resources, delivers his speech during an OPEC seminar March 18. Attacks on the oil industry in Nigeria raised supply fears.

The Nigerian military over the weekend began a series of strikes against suspected militant camps as it responded to hijackings of two oil-service vessels.

The main militant group said Monday that it had ordered a blockade of key shipping channels used by the oil industry, a threat the military dismissed as propaganda. The group also claimed to have blown up two pipelines over the weekend.

The army confirmed a pipeline supplying state-owned Nigerian Gas Co. had been blown up but with no impact on supply. Chevron Corp. over the weekend said its operations continued as normal. Royal Dutch Shell PLC reiterated Monday that it is investigating a report that one of its facilities was attacked.

“The fighting in Nigeria seems to have given the market a reason to move higher,” said Peter Beutel, president of Cameron Hanover, an energy-risk-management firm in New Canaan, Conn.

[Crude-Oil Futures]

Nigeria pumped 1.76 million barrels a day of crude in April, or 2.1% of the world’s daily supply, according to the International Energy Agency. About 500,000 barrels a day of its production capacity has been closed because of technical problems and sabotage.

Still, April production was still 9,000 barrels more than permitted under the country’s quota as a member of the Organization of Petroleum Exporting Countries, according to IEA data. The world’s cushion of supply available in a crunch has also risen as demand slumps.

That arithmetic will be under review as OPEC meets May 28. With prices hovering close to $60 a barrel and some OPEC members breaking quota pledges, few analysts see the cartel approving new cuts beyond the 4.2 million barrels a day they authorized last year.

“OPEC will most likely simply reiterate their call for better compliance, as they did at the last meeting,” said Michael Wittner, global head of oil research at Société Générale in London.

In other commodity markets:

COPPER: Rising stocks and a lower U.S. dollar prompted investors to buy the red metal. Thinly traded nearby May copper gained 4.75 cents, or 2.3%, to settle at $2.0755 a pound on the Comex division of the Nymex. The most-active July contract rose 5.45 cents, or 2.7%, to $2.0720.

SOYBEANS: Prices rose on planting uncertainties and strength in outside markets like crude oil. Rainy weather in the Midwest has delayed farmers from getting in the fields. Chicago Board of Trade July soybeans gained 16 cents, or 1.4%, to $11.465 a bushel.

Write to Gregory Meyer at [email protected]

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