Oil rises above $70 on Nigeria attack
Supply concerns raised after militant group claims to have attacked a pipeline. Shell says area is closed.
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LONDON (Reuters) -- Oil prices rose above $70 a barrel Thursday after Nigerian rebels attacked a Royal Dutch Shell pipeline, raising worries about supply from the OPEC-member nation.
Crude also got a lift as Wall Street rallied on hopes for an economic recovery and as gasoline futures rebounded heading into the peak of the U.S. summer driving season.
U.S. crude for August delivery rose $1.56, or 2.3%, to settle at $70.23 a barrel Thursday.
In the latest in a string of attacks in Nigeria, Africa's biggest oil producer, the Movement for the Emancipation of the Niger Delta (MEND), said it had sabotaged the Billie-Krakama pipeline in Rivers State, which supplies one of the country's main export terminals.
Attacks by MEND have forced foreign oil companies, including U.S. oil major Chevron (CVX, Fortune 500) and Italy's Agip, to shut at least 133,000 barrels per day of oil production in the last month.
Shell said it had shut down one of its pipeline junction points Thursday but declined to say whether any oil production had been affected.
"Nigeria's MEND rebels have escalated their activities recently and are certainly a supportive influence (to oil prices)," Mike Fitzpatrick, vice president at MF Global in New York, said in a research note.
The gains came alongside a roughly 2% rally on Wall Street fueled by optimism that the recession is easing -- a prospect that could spell higher global energy demand.
Oil prices also got a boost from a rebound in gasoline futures ahead of the July 4 holiday -- typically one of the busiest driving holidays of the year.
Wednesday, U.S. government data showed stocks of gasoline in the world's largest energy consumer rose 3.9 million barrels last week, exceeding analysts' predictions. But inventories of the motor fuel remain roughly equal to where they were last year, providing little cushion if motorists hit the roads hard during the vacation season.
Auto and travel group AAA said in a survey report this week July 4 road travel would be down 1.9% due to the effects of the recession.
Stocks of distillates such as diesel and heating oil, meanwhile, have risen to 10-year highs due to the recession.
Crude prices have more than doubled since the lows near $30 a barrel plumbed last winter, on hopes for an economic recovery. A Reuters poll of industry analysts showed oil prices are expected to average more than $70 a barrel in 2010, compared with the latest forecast average of $56.59 for this year.
The U.S. economy shrank slightly less in early 2009 than previously thought, the government reported on Thursday, though there was widespread weakness in activity and demand was soft.
Gross domestic product dropped 5.5% in the first quarter, from 6.3% in the last quarter of 2008.
Separately, the Labor Department said the number of workers filing new claims for jobless benefits unexpectedly rose last week by 15,000 to a seasonally adjusted 627,000 -- a measure of the strain still faced by hard-pressed consumers. 
