Oil Rises on Nigerian Militant Pipeline Attack, U.S. Stockpiles


"The bearishness of the gasoline numbers was offset by the oil drawdown in the inventory report."

Crude oil rose for a second day in New York after militants claimed they destroyed a Royal Dutch Shell Plc pipeline in Nigeria, Africa's largest oil producer, and as U.S. stockpiles declined.

A "major" delivery pipeline at Shell's Forcados terminal was breached using high explosives at 8:30 p.m. local time yesterday, the Movement for the Emancipation of the Niger Delta said in a statement. U.S. oil stockpiles last week fell a more- than-expected 3.87 million barrels to 357.7 million as gasoline supplies climbed, the Energy Department said yesterday.

"If there is a significant enough disruption that could flow through to the fundamentals and support the price," said Toby Hassall, an analyst with Commodity Warrants Australia Ltd. in Sydney. "The bearishness of the gasoline numbers was offset by the oil drawdown in the inventory report."

Crude oil for July delivery rose as much as 55 cents, or 0.8 percent, to $71.58 a barrel on the New York Mercantile Exchange. It was at $71.14 a barrel at 11:17 a.m. Singapore time. Prices are up 60 percent this year.

Militants blew up a delivery line that carries crude oil from the Tunu, Opukusu and Ugbotubu flow stations in Bayelsa state, said the statement from MEND spokesman Jomo Gbomo.

"Shell should take a cue from Chevron and vacate the Niger Delta region to avoid collateral damage to their investment and death to staff," according to the statement.

Shell, Europe's biggest oil company, suspended obligations on crude exports from the Forcados terminal to cover the remaining loading program for June and July, Precious Okolobo, a company spokesman, said yesterday by phone from Lagos.

Forcados oil exports were scheduled to be about 200,000 barrels a day prior to attacks in March, according to shipment plans. Shell's Nigerian oil and gas production averaged the equivalent of 360,000 barrels a day in 2008.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe