Singapore: Oil rose towards $69 on Thursday, after Nigeria’s main militant group raided a Royal Dutch Shell pipeline and disrupted a major export terminal, recouping losses caused by hefty builds in US fuel stocks.
Prices had earlier extended Wednesday’s fall after data showed gasoline stocks in the world’s top consumer rose 3.9 million barrels last week, exceeding analysts’ predictions, as refiners prepared for the peak driving season that was expected to be less robust this year, while distillates hit 10-year highs.
Analysts said the price drop was limited by a sharp 3.8 million barrel decline in US crude stocks.
US crude futures for August gained 27 cents to $68.94 a barrel by 11:56am, after falling to $68.11 earlier. London Brent crude rose 35 cents to $68.68.
“The EIA report which shows a large increase in products stocks was a negative factor for oil prices. But we are seeing that with oil falling from the high $60s, buying support emerged and limited the downside,” said David Moore, commodity strategist at Commonwealth Bank in Sydney.
The Movement for the Emancipation of the Niger Delta (MEND) said it had attacked the Billie/Krakama pipeline in Rivers state in the Niger Delta that feeds into pumping stations linked to the Bonny crude terminal, one of Nigeria’s main export terminals.
No independent verification was immediately available on MEND’s latest statement, which came after the group also claimed responsibility on Sunday for attacks on three installations run by Shell, which had said it was investigating the reports.
The raids came ahead of the Nigerian president’s proposal later on Thursday for a 60-day amnesty programme for the militants, in a bid to end years of attacks on the oil industry, which have cut output to less than two-thirds of its installed capacity of 3 million barrels per day over the last three years.
Traders said oil’s recovery was partly due to a rally in Asian shares for a second day after the Federal Reserve reinforced that interest rates will be kept at a record low for a while.
The Fed left interest rates near 0% but tweaked its statement to say financial markets had improved and signalled less concern about deflation, while reiterating the economy will remain weak.
The US dollar gave up some of its gains, losing some ground to higher-yielding currencies, such as the Australian dollar, on the rise in stocks. A firmer dollar makes commodities priced in dollars more expensive for holders of other currencies.
Optimism over a potential recovery lifting oil demand has raised prices from below $40 over the past three months, though fears about the global economy lingered.
And government forecasters said that even though US oil demand should rebound when the economy recovers, crude imports might not resume growth as quickly as they did when past recessions ended because of new domestic oil production coming onstream.