NEW YORK (Reuters) - Oil prices rose nearly 4.8 percent to a six-month high on Monday as violence in Africa’s top crude exporter Nigeria and a fire at a key U.S. East Coast refinery revived concern about supplies.
U.S. crude for June rose $2.69 to $59.03 a barrel, the highest settlement since November 11. London Brent for July rose $2.49 to $58.47.
The gains came after Nigerian militants said they had blown up two oil and gas pipelines in the Niger Delta and would blockade waterways in the region in an effort to disrupt energy exports from the OPEC country.
“Crude has been bolstered by the unrest occurring in Nigeria, where militants have declared an all-out war on the oil industry,” Addison Armstrong, analyst at Tradition Energy in Stamford, Connecticut, said in a research note.
In the United States, an explosion rocked Sunoco’s oil refinery in Marcus Hook, Pennsylvania, setting a fire and disrupting production from the 178,000-barrel-per-day plant heading into the peak summer driving season.
“The Nigerian stories probably would not have much of an impact on their own, but combined with the refinery glitches are contributing to a positive start to the week,” said Tony Machacek, a broker at Bache Commodities.
The refinery fire pushed U.S. gasoline futures to a seven-month high over $1.76 a gallon.
Analysts added that a weaker U.S. dollar and gains in equity markets were boosting oil’s gains.
U.S. stocks rose about 3 percent as a better-than-expected quarterly profit and upbeat outlook from Lowe's Cos Inc LOW.N, the No. 2 U.S. home improvement retailer, fueled hopes the economic slump was easing and spending was stabilizing.
Adding support, weather forecasters said a strong rain storm off the east coast of Florida had the potential to develop into the first named storm of the 2009 Atlantic hurricane season.
Powerful tropical storms and hurricanes can disrupt operations at offshore oil platforms and coastal refineries.
OPEC MEETING LOOMS
Oil has risen from a near five-year low of $32.40 reached in December as the market has tracked a rally in equities underpinned by hopes of an economic recovery.
Supply curbs by OPEC have also bolstered prices. The group, which has agreed to cut 4.2 million barrels per day (bpd) of output since September, meets on May 28 to revisit policy.
So far, comments from ministers from the Organization of the Petroleum Exporting Countries suggest the group is unlikely to reduce supply further. But prices are still lower than some in the group would like.
Iranian President Mahmoud Ahmadinejad said on Monday that OPEC’s second largest oil exporter considered an oil price of $80 to $90 barrel as “suitable,” the semi-official Mehr news agency reported.
The June U.S. crude contract expires Tuesday and dealers said trading may be more volatile than usual as a result.
Additional reporting by Fayen Wong in Perth; Editing by David Gregorio
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