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Sun, Nov 26, 2006 - Page 10 News List

Deadly attack in Nigeria fires up global oil prices


Crude oil prices rose on Friday after a deadly attack on an oil facility in Nigeria, and as the US dollar weakened on speculation of further interest rate hikes in Europe.

Light sweet crude for January delivery rose US$0.66 to settle at US$59.90 a barrel in electronic trading on the New York Mercantile Exchange. There was no floor trading due to an extended holiday.

Brent crude rose US$0.68 to close at US$60.03 on the ICE Futures exchange in London.

In other NYMEX trading, heating oil ended US$0.0305 higher at US$1.6970 per gallon, unleaded gasoline rose US$0.0102 to settle at US$1.5990, and natural gas finished US$0.238 higher at US$7.956 per 1,000 cubic feet.

Seven foreign oil workers were taken hostage Wednesday from an Italian oil ship off Nigeria's southern coast, the latest in a string of hostage takings and attacks on Nigeria's oil industry which have cut production by 25 percent since the beginning of the year.

A British man was killed along with two kidnappers and a soldier as the other six hostages were freed by the Nigerian Navy, according to the Italian oil company involved, Eni SpA.

The rise in dollar-denominated oil comes as the euro currency broke through the US$1.30 barrier on Friday for the first time since April last year, rising more than a US cent on speculation about a European interest rate increase in light trading.

Oil prices were still adjusting to Wednesday's weekly US petroleum report that said crude-oil inventories swelled by 5.1 million barrels last week to 341.1 million barrels, or 6 percent above year-ago levels.

The nation's gasoline stocks grew by 1.4 million barrels to 201.7 million barrels after a drop in refinery activity, leaving them less than 1 percent below year-ago levels. The supply of distillate fuel, which includes heating oil and diesel, is slightly above year-ago levels even after a 1.2 million barrel decline that left inventories at 133.8 million barrels.

A separate report by the agency showed the nation's inventory of natural gas declining by 1 billion cubic feet, but at 3.45 trillion cubic feet, the amount of fuel in underground storage is still 7.5 percent above year-ago levels.

Oil prices have fallen by about 23 percent since hitting an all-time trading high above US$78 a barrel in mid-July. They haven't settled above US$62 a barrel since Oct. 1, despite the OPEC's announcement last month that it would reduce output by 1.2 million barrels a day.

Skepticism that OPEC members are committing to production cuts, as well as milder-than-normal US temperatures this fall, have moderated prices.

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