June 18, 2008 / 3:34 AM / 12 years ago

Oil rises on Nigeria strike threat

NEW YORK (Reuters) - Oil rose on Wednesday as a strike threat by workers in OPEC nation Nigeria stoked supply concerns ahead of a meeting of top producers and consumers aimed at tackling soaring energy prices.

Gas and diesel pumps along with gas prices are shown at an Exxon gas station in Carlsbad, California May 28, 2008. REUTERS/Mike Blake

U.S. crude settled up $2.67 to $136.68 a barrel, while London Brent crude settled up $2.72 at $136.44 a barrel.

Workers at the Nigerian unit of U.S. energy giant Chevron (CVX.N) were poised to go on strike after talks between their union and management failed.

Further support came after the White House said it was not expecting Saudi Arabia to announce an output increase when producers and consumers meet in the kingdom on June 22.

News the world’s top oil exporter plans to ramp up output to help bring down high prices, which touched a record near $140 a barrel earlier this month, had weighed on prices earlier in the week.

“The news about Nigeria workers at Chevron ready to strike is unsettling because they produce light sweet crude, which we want and if OPEC doesn’t raise output ... that’s bullish for crude,” said Mark Waggoner of Excel Futures Inc.

Rising fuel costs have caused protests around the globe, prompting Saudi Arabia to call the meeting between producers and consumers in Jeddah.

Oil prices have jumped nearly 40 percent this year, extending a six-year rally that has sent prices up nearly seven-fold on rapid demand growth from emerging economies like China.

A surge in speculative buying by investors hedging against inflation and the weak dollar has accelerated the rally this year. Some analysts say rising investor flows have created an oil “bubble” that has inflated prices beyond what supply and demand fundamentals warrant.

President George W. Bush on Wednesday called on Congress to lift a ban on offshore oil drilling to help ease prices, but analysts said this would bring little quick relief to consumers.

“We believe this (proposal) will have a limited impact given the long lag time to actual production and new supply coming online,” said Chris Jarvis, senior analyst for Caprock Risk Management in New Hampshire.

Prices rebounded from earlier losses following the release of a weekly U.S. government inventory report showing U.S. crude oil stocks fell for a fifth week in a row, below analyst expectations, as a rise in refinery demand offset an increase in imports.

Stocks of distillates, including heating oil and diesel, rose by 2.6 million barrels, above forecasts for a 1.8-million-barrel rise.

U.S. gasoline stockpiles fell 1.2 million barrels, compared with calls for an 800,000-barrel rise.

Reporting by Matthew Robinson, Gene Ramos and Robert Gibbons in New York; Margaret Orgill in London and Chua Baizhen in Singapore; Editing by Christian Wiessner

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