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 Oil prices had initially extended Thursday's decline of more than $2 a barrel, with a stronger U.S. dollar prompting investors to book profits. But after oil dipped below $115 a barrel, news of the new threat to supplies put it back on the upward track.
Light, sweet crude for June delivery on the New York Mercantile Exchange rose 74 cents to $116.80 a barrel in electronic trading by late afternoon in Singapore. It fell as low as $114.51 a barrel earlier.
With the dollar still strengthening, though, it remains to be seen if oil will resume its march toward $120 a barrel. Investors see commodities such as oil as a less effective hedge against inflation when the dollar strengthens. A stronger dollar also makes oil more expensive to investors overseas.
"The current thinking is that the U.S. dollar may be bottoming out, and so market participants therefore unwound some of their positions in oil and took some profits," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore, before news of the pipeline attack in Nigeria.
The June Nymex crude contract dropped $2.24 to settle at $116.06 a barrel on Thursday.
Analysts said the dollar gained ground Thursday on speculation the Federal Reserve is growing concerned about inflation and may not cut interest rates as much as once thought. Higher interest rates tend to stabilize or strengthen the dollar.
Few analysts, though, are willing to predict that oil's record run is over. Investors remain concerned about tight supplies of oil amid growing global demand, they say.
"Supply concerns will still underpin oil pricing," Shum said.
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 In Nigeria, The Movement for the Emancipation of the Niger Delta, or MEND, said Friday its fighters hit a pipeline late Thursday in southern Rivers State. That brought to four the number of pipelines the group has attacked in the past week.
MEND said in a statement that the pipeline attacked Thursday belongs to a Royal Dutch Shell PLC joint venture. A Shell spokesman had no immediate comment.
MEND is the main militant group behind a series of recent attacks in Nigeria's southern oil region.
Shell said earlier this week that it had shut in about 170,000 barrels a day of Nigerian production due to one of the earlier attacks. Adding to supply concerns, BP PLC is also considering shutting down its 700,000 barrel-a-day Forties pipeline system if a strike continues at a U.K. refinery.
In other Nymex trading, heating oil futures rose 0.25 cent to $3.2608 a gallon while gasoline prices dropped 2.91 cents to $2.9895 a gallon. Natural gas futures lost 3 cents to $10.76 per 1,000 cubic feet.
Brent crude futures rose 95 cents to $115.29 a barrel on the ICE Futures exchange in London.
[Associated Press; By GILLIAN WONG]
Associated Press writer Edward Harris in Lagos, Nigeria, contributed to this report.
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