Niger Delta crisis: Oil price rises to $71 per barrel

Gbola Subair, Abuja with Agency Report - 30.06.2009

The crude oil price in the international market has increased by $2, courtesy of the crisis in the Niger Delta region of Nigeria. According to Reuters, oil rose nearly by $2 to reach $71 a barrel on Monday, lifted by fresh rebel attacks on oil installations in Nigeria and gains in equity markets.

Nigeria’s main militant group said its fighters had attacked an oil facility belonging to Royal Dutch Shell in the Niger Delta on Monday, days after President Umaru Yar’Adua proposed an amnesty.

The United States crude rose by $1.88 to $71.04 a barrel while London Brent crude rose by $1.69 to $70.61. Further support came as the US stocks opened higher on signs of life in the global economy, which kept investors optimistic over the prospect of a recovery.

“Equities are a little bit stronger and that has been helping the market,” said Peter Beutel, president of Cameron Hanover in New Canaan, Connecticut, adding that buying by funds had been strong. “Anytime that we see the Dow Jones higher, the funds take that as a sign that the economy is going to strengthen and that oil demand will strengthen along with that,” he added.

Signs of a turnaround in the global economy have helped lift crude prices up from below $40 a barrel in February. The economic crisis has battered global fuel demand, knocking crude off record highs set above $147 a barrel last year.

The US Energy Information Administration revised up April US oil demand by 1.18 per cent from its early estimate of 18.255 million barrels per day, suggesting a potential turnaround in the US economy.

Pipeline bombings, attacks on oil and gas installations and kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two-thirds of its installed oil output capacity of 3 million barrels per day (bpd).