Oil prices rose back above $69 a barrel Thursday as the oil industry began to feel the effects of a general strike in Nigeria, Africa's largest producer of crude oil.
Nigeria's labor unions launched a strike Wednesday aimed at overturning government price increases on gasoline, among other demands that the government has already conceded.
"The strike ... could potentially halt just under 2 million barrels a day of oil production," said James Neale of Citigroup. "All commercial marine services in Nigeria were canceled on Wednesday, further raising the likelihood of more disruptions to the country's oil sector and more oil price volatility."
Light, sweet crude for August delivery gained 60 cents to $69.46 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. Brent crude for August delivery added 53 cents to $70.95 a barrel on the ICE Futures exchange in London.
Nymex prices had fallen overnight on larger-than-expected increases in U.S. stockpiles of crude oil and gasoline, which seemed to assuage questions about the U.S. refining industry's ability to meet peak summer demand for gasoline. The concerns have been fed by an unusually large number of refinery outages.
The contract fell 68 cents to $68.86 a barrel Wednesday, while the July Nymex crude contract lost 91 cents to expire at $68.19 a barrel.
They resumed their climb on concerns about Nigeria, one of the top overseas suppliers to the United States.
Production and loading of crude oil for export have been disrupted by the strike, a union leader told Dow Jones Newswires Thursday. However, Bayo Olowoshile, general secretary of Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said that loading of oil for export has been affected "more seriously."
The development followed a directive by Pengassan to its members to shut down both production and loading facilities by midnight Wednesday, as part of the union's efforts to force the government to meet its demands.
Mobil Producing Nigeria Unlimited, a unit of Exxon Mobil Corp., had complied with the directive, the union leader said, as had union members at Royal Dutch Shell PLC.
Olowoshile said he was checking with the other oil companies to confirm their compliance. These include Chevron Nigeria, Elf Petroleum Nigeria, a unit of Total SA, and Nigeria Agip Oil Co., a unit of Eni SpA.
The U.S. Energy Information Administration said Wednesday that crude inventories jumped by 6.9 million barrels in the week ended June 15. Analysts had expected crude stocks to drop by 150,000 barrels. Gasoline inventories rose by 1.8 million barrels, more than the 1 million barrel increase expected by analysts surveyed by Dow Jones Newswires.
By Pablo Gorondi
The Associated Press
