Oil rose towards $71 a barrel on Friday after Nigerian rebels said they blew up a wellhead in a Royal Dutch Shell oilfield and as equity markets rallied on perceptions the global recession was easing.

The move followed a 2 percent gain on Thursday and put oil on course for a 7 percent gain this week, buoyed by prospects for an economic recovery that has lifted prices from below $40 over the past four months.

The release of the June consumer sentiment index by the Reuters/University of Michigan Surveys of Consumers later on Friday was expected to reflect a mildly improving outlook for the U.S. economy, auguring well for ailing world energy demand.

U.S. first-quarter gross domestic product shrank less than estimated, suggesting the downturn was easing.

By 1110 GMT, benchmark August U.S. crude oil was up 50 cents per barrel at $70.73, having hit a high of $71.29, up $1.06. London Brent rose 46 cents to $70.24.

Nigeria’s Movement for the Emancipation of the Niger Delta (MEND) said it attacked the wellhead in the Afremo oilfield because the military had gone on a “punitive expedition” in Delta state shortly after President Umaru Yar’Adua announced an amnesty offer for rebels.

SHUT IN PRODUCTION

The military denied carrying out any such campaign.

Shell said it was investigating reports of an attack on its Afremo platform B facility, which had already been shut down following an attack on the Trans Escravos pipeline in February.

Afremo was one of the sites MEND also said it had attacked in a triple raid on Sunday. It described the field as being 14 miles from an export terminal through which crude oil from Shell’s Forcados fields is pumped.

Pipeline bombings, attacks on oil and gas installations and the 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 intensity of recent attacks in Nigeria have taken the oil market by surprise and tightened West African oil supplies.

“Attacks by the MEND have forced foreign oil companies to shut at least 133,000 barrels per day of Nigerian production in the last month,” MF Global said in its daily note to clients.

Iranian tension has also supported oil. About 20 people have died in protests after Iran’s June 12 presidential election, the most serious unrest since the 1979 Islamic revolution.

Fuelling oil’s rise, Exxon Mobil said its huge Baytown refinery suffered an operational glitch that triggered flaring, sparking worries the largest U.S. oil refinery could tighten gasoline stockpiles during this summer’s peak demand driving season.

Firmer Asian stocks on the back of Wall Street’s rally also lent support, with shares outside Japan climbing 1.4 percent and Japan’s Nikkei up 0.8 percent.

European shares advanced in early trade.

A further boost came from a fall in the dollar against most major currencies on Friday as investors shifted funds back into risky assets after the Federal Reserve this week appeared to confirm it would keep interest rates low for a while.

The Reuters/University of Michigan final June consumer sentiment index, due at 1355 GMT, is expected to show a reading of 69.0 compared with 68.7 in the May report, a Reuters poll of economists showed.

LONDON, June 26 (Reuters)

Oil prices climbed towards $41 a barrel on Tuesday after OPEC signaled it might deepen its record output cuts to help boost prices and drain bloated stockpiles.

OPEC’s president told Reuters the group could take more action when it meets on March 15. Later, an OPEC source said the group may discuss a 1 million barrel-per-day cut in addition to the 4.2 million in reductions agreed since September.

U.S. light crude for March delivery rose 73 cents to $40.81 by 1730 GMT, having fallen to $39.83 on Monday, the first time below $40 a barrel in three weeks. London Brent rose 53 cents to $44.35.

“Prices do seem to have bottomed for now,” said Kevin Norrish of Barclays Capital. “OPEC has probably taken more than enough off the market and there’s a risk of over-tightening, in which case prices would go back up fairly swiftly.”

Slowing economic growth in the United States, China, Japan and other major consumers has dampened fuel use, swelled stocks and knocked more than $100 a barrel off the price of crude since its July 2008 peak near $150.

But despite the softening world energy demand, oil has held stubbornly above the $40 mark in recent weeks, buoyed partly by the aggressive OPEC cuts.

A Reuters survey showed the group, which pumps a third of the world’s oil, had carried out about 67 percent of its record curb in January.

Adding support to prices Tuesday were oil worker labor disputes in the United States, Europe and Nigeria — though none had hurt supplies yet.

Negotiators were hashing out a contract for U.S. refinery and pipeline workers and the union has said it could strike if talks break down — a move that would shut some 10 percent of the nation’s fuel production capacity within days.

In Europe, hundreds of contract workers at British energy facilities were protesting the use of foreign workers, though operations at refineries, power plants and pipelines remained unaffected.

Nigeria’s senior oil workers’ union, meanwhile, threatened to begin an indefinite strike from Monday unless the government improved security in the Niger Delta, its restive oil heartland.

Nigeria pumped about 1.75 million barrels per day (bpd) in January, versus its OPEC supply target of 1.67 million bpd, according to the Reuters survey.

U.S. crude inventory data were likely to show stocks rose for the sixth time in a row as refinery utilisation remained curbed by seasonal maintenance and imports rose, according to a Reuters poll of analysts.

Analysts issued their forecasts ahead of weekly inventory data to be released on Wednesday by the U.S. Energy Information Administration. Industry group American Petroleum Institute will release its data on Tuesday.

LONDON, Feb 3 (Reuters)

Oil prices dropped 3 percent on Wednesday after OPEC announced a record supply cut that dealers said may fail to offset slumping world energy demand.

U.S. crude oil prices fell $1.40 to $42.20 a barrel by 1:35 p.m. EST (1835 GMT), after dipping to a more than four year low of $40.20 earlier in the trading session. London Brent rose 66 cents to $47.31 per barrel.

Oil prices have fallen more than $100 since July as a global financial crisis cuts into consumer and industrial fuel demand, and top forecasters are now predicting the first decline in world energy use since 1983.

The Organization of the Petroleum Exporting Countries, eager to push prices back up, announced on Wednesday an agreement to cut 2.2 million barrels per day of output starting Jan. 1, the biggest single reduction on record.

The agreed cut was slightly higher than expected and will add to previous OPEC deals to cut 2 million bpd since September. But oil traders focusing on the global economic downturn reacted coolly.

“It seems like, despite the fact that the economies of producer nations are clearly in trouble, they don’t have the temerity to actually go ahead and do the kind of cut that would be really interesting to traders to turn this around,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

Some traders had also hoped oil producing countries that are not part of OPEC might have weighed in. But neither Russia nor Mexico, which have cooperated with OPEC production cuts in the past, offered to reduce output.

The White House called OPEC’s decision to cut production “short-sighted” and said the oil cartel has an obligation to keep the market well-supplied.

“It’s not clear that OPEC’s actions will be effective given the shift in global demand and the ability of OPEC members to meet the cartel’s targets,” said spokesman Tony Fratto.

“Regardless, OPEC has an obligation to keep the market well-supplied and to consider the health of the global economy, so efforts to limit the benefits of lower energy prices are short-sighted,” he said.

OPEC, however, is desperate to halt the slide in prices with economists predicting 11 of OPEC’s 12 members, as well as Russia and Mexico, will face budget deficits with crude oil at $40 a barrel.

Energy analysts said the cuts could bolster prices in the longer run if OPEC members comply and if demand falls less than expected in 2009.

“The biggest question about how effective this agreement will be is just how much demand will contract,” said Sarah Emerson, director of Energy Security Analysis Inc in Boston. “I think OPEC is showing that they have strong intentions to support prices.”

The slump in prices has already sent shock waves through oil producer countries and top companies, leading to cutbacks and delays in spending on key projects that had promised to boost future world output.

The soft market has also led oil refiners in the United States, the world’s biggest energy consumer, to slow down fuel production to match weak consumer demand.

The U.S. Energy Information Administration said the nation’s crude and refined fuel stockpiles rose last week as a demand slump led refiners to run less oil.

Richard Valdmanis
NEW YORK, Dec 17 (Reuters)