Sun, Jun 13, 2004 - Page 10 News List

Oil prices fall as Nigerian general strike suspended

REUTERS , LONDON

Oil prices eased yesterday as Nigerian unions called off a general strike without disruption to supplies from Africa's biggest oil exporter.

London benchmark Brent crude futures were down US0.29 at US$35.45 a barrel after rising about US$0.50 on Thursday. US markets were shut for the funeral of former US president Ronald Reagan.

Supply worries got some relief as Nigeria's main umbrella labor union suspended a three-day-old general strike, saying the government had complied with a court order to force down fuel prices.

"We have no reason to continue the protest. We have agreed to ... suspend the strike," Nigeria Labor Congress leader Adams Oshiomhole told reporters in Lagos.

The strike did not affect oil supplies from Nigeria, a member of the OPEC cartel and a large supplier to the US.

Prices have retreated from recent peaks after OPEC assured markets of extra supplies of crude and US supply stocks have gradually crept higher.

US prices hit a record of US$42.45 a barrel early this month while Brent soared to a new 13-year high of US$39.12 after May attacks on foreign workers in Saudi Arabia underscored the risks to supplies from the kingdom, which boosted its production to over nine million barrels per day in June to help cool prices.

"Tense geopolitics should provide some support for prices despite the clear Saudi intention to cool the markets," Deutsche Bank analyst Adam Sieminski wrote in a report.

"Even at a lower US$35 Brent the geopolitical premium remains," Sieminski wrote.

Prices are being underpinned by roaring world oil demand, which the International Energy Agency (IEA) estimated as growing at the fastest rate since 1980.

OPEC members Iran and Kuwait have followed Saudi Arabia in providing Asian oil refiners with full contract volumes as part of the cartel's pledge to hike its output ceiling by 2 million bpd from July 1.

Saudi Arabia said on Thursday that while Asian buyers would get full term volumes and most other customers would receive higher supplies, extra cargoes would be made available if needed -- the first sign of new oil in the market.

The IEA said that the OPEC supply hike should allow stocks to build further after recent data showed that US crude inventories had risen to their highest level in almost two years.

Gasoline stocks have also built, though they remain well under the volume that is considered a comfortable level for summer.

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