The Movement for the Emancipation of the Niger Delta (MEND) said its fighters struck the Shell Forcados platform in the Delta state at about 0230 GMT.

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.

U.S. crude for August delivery rose to a high of $70.06 per barrel, up 90 cents, before slipping back slightly to $69.75 by 1230 GMT.

London Brent crude was up 60 cents at $69.52.

“The Nigerian supply disruptions brought in some buying,” said Christopher Bellew, broker at Bache Commodities in London.

On Friday, four militant Nigerian factions said they would accept in principle an amnesty offer from President Umaru Yar’Adua, raising hopes 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.

The loss of output have been a supportive factor at a time when global recession has bitten deep into oil demand.

DEMAND FORECAST CUT

The IEA, adviser to 28 industrialised countries, has cut sharply its medium-term forecast for oil demand, saying there was a chance of an extended contraction, but added the threat of a supply crunch had only receded, not gone away.

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

The IEA’s previous medium-term forecast, issued in December, had forecast growth of a million bpd a year from 2008 to 2013.

Algerian Energy and Mines Minister Chakib Khelil said on Monday oil demand was still weak due to the weakness of the U.S. and European economies and world oil stocks remained high.

Khelil said an increase in OPEC oil production was hard to envisage, despite rising crude prices.

European stock markets crept higher on Monday with financial and energy companies responding to an improving economic outlook for the euro zone.

Dealers said macro-economic data would continue to have a major impact on sentiment in the oil market.

U.S. consumer confidence data on Tuesday leads a heavy calendar of economic data this week, including China’s Purchasing Managers Index on Wednesday and a U.S. jobs report and manufacturing data on Thursday.

The U.S. data will help determine whether an oil market rally, which has lifted prices more than 50 percent this year on hopes of economic recovery, has any legs.

In the first big number for the week, industrial output from the world’

LONDON, June 29 (Reuters)

• U.S. factory orders increased 1.1% in April, an unexpected gain that was boosted by the high cost of gas and other petroleum products, the Commerce Department announced yesterday (Tuesday). Economists had expected a smaller gain of just 0.1% after an upwardly revised 1.5% gain in March, MarketWatch reported.

• Borders Group Inc. (BGP) announced yesterday (Tuesday) it would reduce 20% of its corporate positions in an ongoing effort to cut costs. The No. 2 U.S. bookseller will eliminate 156 positions at its Ann Arbor, Mich. Headquarters and 118 corporate positions at other locations, Reuters reported. The reductions represent less than 1% of Borders total staff.

• In a bid to lure new customers to purchase reloadable cards, Starbucks Corp. (SBUX) will offer free AT&T Inc. (T) wi-fi service to patrons who buy a minimum $5 on a reusable Starbucks Card. “Customers have let us know they want to be recognized for choosing Starbucks,” Brad Stevens, vice president of customer relationships, told USA Today. Particularly, he says, at a time when “budgets are tight.”

• Annual inflation in Kenya soared 31.5% higher in May, Bloomberg reported, citing the country’s National Bureau of Statistics reported yesterday (Tuesday). May’s numbers are even steeper than April, when soaring food prices pushed inflation up 26.6%.

• Chevron Corp.’s (CVX) vice chairman told Bloomberg that the company will spend up to $5 billion in African oil projects – including nearly $5 billion for a gas-to-diesel conversion plant in the Niger Delta – to boost production and help accommodate global demand. “The world is saying it needs it,” said Peter Robertson.

• Staples Inc. (SPLS) yesterday (Tuesday) raised its hostile bid for Dutch office supplies distributor Corporate Express NV (ADR: CXP) to $2.6 billion. Rather than accepting two previous overtures from Staples, Corporate Express last month struck a surprise deal to buy a French competitor, Lyreco SAS, which would create an international competitor to Staples, the Associated Press reported. Lyreco may be entitled to a $46.8 million break-up fee if Corporate Express shareholders pursue the Staples deal.

• Lehman Brothers Holdings Inc. (LEH), set to report its first quarterly loss since going public, is considering raising billions of dollars in fresh capital to help shore up its balance sheet, the Wall Street Journal reported. The exact amount isn’t known, but analysts estimate it is likely to be between $3 billion and $4 billion. Lehman will probably reveal the details of the plan with its quarterly results, due the week of June 16.

• Oil prices fell sharply yesterday (Tuesday), at times slipping more than $3 a barrel on the New York Mercantile Exchange. The drop came after Federal Reserve Chairman Ben S. Bernanke indicated that more interest rate cuts are unlikely. His comments sent the dollar higher and raised questions about oil’s ability to reach new highs in the short term.

Source: Global Investing Roundups Wednesday, June 4th, 2008

Traders were clearly in a profit-taking mood yesterday, after crude soared by nearly 5% last week.

Oil is “getting heavy after last week,” said John Kilduff, of MF Global. “We saw parabolic action [last week] and signs that we may have made a top.”

The market shrugged off supply concerns. In early Tuesday in electronic trading, oil topped $133 a barrel after Royal Dutch Shell confirmed an attack on one of its pipelines claimed by a separatist group in the key Niger Delta. Shell said some production had been stopped to contain an oil spill.

Also ignored was a report that Iran’s exports fell by about 200,000 barrels per day, through the period ended May 20, with the National Iranian Oil company saying the phenomenon was seasonal and was to be made up later.

Source: Crude Retreats

Meanwhile, the world’s demand for oil keeps rising as more people around the globe – especially in emerging giants like India and China – set up factories, buy cars, take flights, heat their homes, and pound the table for “more juice.”

Then there are political question marks. Iraq is a mess. Russia is inclined to use its resource exports as a carrot or a stick, depending on the mood. And Nigeria is a special basket case.

Last week, for instance, an escalation in attacks by militants in the Niger Delta sent oil to a record close. Exxon has said the situation is so bad that its production is now closed and it is unable to meet its contractual obligations.

Royal Dutch and other Western oil companies there have the same problem. Not good. Nigeria is Africa’s largest producer and the world’s eleventh biggest.

No wonder oil is trading near $120 a barrel.

This is the back story. But it’s important to understand that it is only that, a story. It doesn’t tell us where oil should be trading. Ultimately, that will be decided by supply and demand, not by this week’s headlines or short-term speculation.

A lot of smart people are beginning to believe this bull market will die hard. Whether you agree or not, it’s worth listening to their side.

According to Michael Lynch, President of Strategic Energy & Economic
Research, oil has now become “the mother of all bubbles.” He has a few pertinent facts on his side.

The U.S. is the world’s largest oil consumer. Yet our economy is in a slump. Despite the sharp rise in oil prices this year, oil demand in the U.S. is actually down 2% so far.

According to the federal Energy Information Administration, high prices and a weak economy will knock down U.S. oil consumption by 90,000 barrels a day this year.

The situation is similar in many other parts of the world. The International Energy Agency (IEA), the Paris-based energy watchdog of the world’s richest nations, just lowered its forecast for world oil demand growth by 460,000 barrels a day. The IEA also sees supply from outside OPEC growing by 815,000 barrels a day, the strongest growth since 2004.

According to Mr. Lynch, “The run-up in price we’re seeing in the last six weeks or so has happened while the fundamentals have, generally speaking, gotten bearish.”

Tim Evans, an energy analyst at Citigroup in New York, agrees. He says the oil bubble is “still expanding” and insists “there is no supply-demand” deficit.

So far the futures market has shrugged off these arguments. Oil is up roughly 25% this year and prices have almost doubled since the start of 2007.

And who can say? Maybe oil will trend higher. Perhaps much higher, especially if we see a major supply disruption.

But high prices always sow the seeds of their own collapse. Consumers will start to conserve. Producers will search for oil that was once too costly to extract. Supply and demand will come back into balance.

Right now the bulls are having their way. But it would be foolish to believe there are no red flags on the horizon. Chief among these is that you keep hearing “the story.”

You know the stories. “The internet changes everything.” “They’re not making any more real estate.” “Oil has nowhere to go but up.”

We’ll see.
Good Investing,

Alex

Crude rose as “the dollar is down again and the Nigerian rebels MEND made good on their threats to have more attacks in Nigeria,” said Phil Flynn of Alaron Trading.

The Movement for the Emancipation of the Niger Delta, or MEND, said its members blew up two more oil pipelines in southern Nigeria, leading Royal Dutch Shell to say it will cut oil production by 169,000 barrels per day in Nigeria. MEND said the pipelines attacked belonged to Shell and Chevron.

And OPEC President Chakib Khelil said there is no need for the cartel “to raise its production now… any increase in output will not affect oil prices because there is a balance between supply and demand.”