Oil rises on Nigeria, stock gains

Futures climb after militants in Africa's largest oil producer attack a Shell platform. Rally on Wall Street raises economic recovery hopes.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

v2-cnnmoney-chart1.jpg.mkw.gif
Click the chart for current oil prices.
Gas prices strain struggling households
The recent spike in gasoline prices comes at a particularly unfortunate time -- many Americans are still reeling from the economic downturn. Here is how some people have responded to the return of pain at the pump.
Did Bernard Madoff receive a fair sentence?
  • Yes
  • It was too harsh
  • No penalty is severe enough

NEW YORK (Reuters) -- Oil prices rose nearly 4% Monday, lifted by word of fresh rebel attacks on oil installations in Nigeria and gains in stock markets.

Nigeria's main militant group said its fighters had attacked an oil facility belonging to Royal Dutch Shell in the Niger Delta on Monday, days after President Umaru Yar'Adua proposed an amnesty.

U.S. crude rose $2.33, more than 3%, to settle at $71.49 a barrel Monday.

Further support came as U.S. stocks opened higher on signs of life in the global economy, which kept investors optimistic over the prospect of a recovery.

"Equities are a little bit stronger and that has been helping the market," said Peter Beutel, president of Cameron Hanover in New Canaan, Conn., adding that buying by funds had been strong.

"Anytime that we see the Dow Jones higher, the funds take that as a sign that the economy is going to strengthen and that oil demand will strengthen along with that," he added.

Signs of a turnaround in the global economy have helped lift crude prices from below $40 a barrel in February. The economic crisis has battered global fuel demand, knocking crude off record highs set above $147 a barrel last year.

The Energy Information Administration revised up April U.S. oil demand by 1.18% from its early estimate of 18.255 million barrels per day, suggesting a potential turnaround in the economy.

The EIA revision came after a bullish International Energy Agency mid-term oil demand forecast Monday, which said that there was a chance of an extended contraction and that the threat of a supply crunch had only receded, not gone away.

Based on a higher economic growth scenario, the IEA predicted Monday product demand would grow by 0.6%, or 540,000 bpd on average, between 2008 and 2014, taking demand from 85.8 million bpd to 89 million bpd.

No. 2 oil consumer China unexpectedly increased gasoline and diesel prices Monday by nearly 9% and 10% respectively.

Nigeria: Crude was bolstered by militant activity in Nigeria as fighters forced production outages in the West African country.

The Movement for the Emancipation of the Niger Delta (MEND) said its fighters struck the Shell Forcados platform in the Delta state.

There was no immediate independent confirmation but Shell said it shut in some oil production at its western operations in the Delta while it investigated reports of attacks.

"The Nigerian situation is the main factor in the market," said Mike Wittner, global head of oil research at Societe Generale. "The attacks appear to be removing some oil production capacity from the market."

On Friday, four militant Nigerian factions said they would accept in principle an amnesty offer from President Umaru Yar'Adua, raising hopes that Africa's top oil producer would halt a battle with rebels.

Pipeline bombings, attacks on oil and gas installations and kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two-thirds of its installed oil output capacity of 3 million barrels per day (bpd).

OPEC: Qatar's oil minister Abdullah al Attiyah said Monday that he does not see any need for OPEC to increase output when it meets in September. OPEC has already targeted cutting 4.2 million barrels from September levels to help support prices.

Algerian Energy and Mines Minister Chakib Khelil said Monday that an increase in OPEC oil production was hard to envisage, despite rising crude prices.

Oil analysts say OPEC can help tighten the oil market significantly later this year if it continues to implement production cuts. Iran's oil minister said Monday that it was producing in line with its OPEC output target.

The market awaits U.S. oil inventory data to be released Wednesday by the Energy Information Administration. Analysts expect a 1.6-million-barrel rise in crude stocks, a 1.5-million-barrel build in distillate stocks and a 2-million-barrel rise in gasoline stocks, according to a preliminary Reuters poll.

Gasoline: The national average for a gallon of regular gas fell overnight to $2.639, down 0.4 cent from $2.643 the day before, according to a survey conducted for motorist group AAA.

Gas prices have fallen for eight days in a row after a sharp runup in May and June. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
6 products to keep the skies friendly Plane travel can be stressful, especially during the holidays. These things can help keep the peace among travelers. More
2014: Helluva good year for stocks The bull market has been going for 2,115 days. If you put you're money in stocks, it's been a very happy year. More
7 up-and-coming foodie destinations These seven cities are seeing a growing interest in local food boost the economy -- and produce some seriously tasty eats. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.