Oil prices slip despite attack in Nigeria

[June 19, 2008]  VIENNA, Austria (AP) -- Oil prices were steady Thursday with investors following reports that a militant group attacked an oil installation in Nigeria, Africa's largest oil producer.

Light, sweet crude for July delivery fell 33 cents to $136.35 a barrel on the New York Mercantile Exchange by noon electronic trading in Europe The contract on Wednesday rose $2.67 to settle at $136.68 a barrel.

A leader of the Movement for the Emancipation of the Niger Delta told The Associated Press that militant fighters traveled in boats through heavy seas to attack the Bonga oil field more than 65 miles from land. But they were not able to enter a computer control room that they had hoped to destroy.

A Royal Dutch Shell spokesman confirmed an attack, but gave no details. He said production had been stopped from the field, which normally produces about 200,000 barrels of crude per day.

The group also said it captured an American worker on a supply vessel in the area of the rig.

Crude futures had climbed more than $2 a barrel on Wednesday on reports that Nigerian oil workers were about to strike after talks between U.S. energy giant Chevron Corp. and the country's white-collar oil industry workers had broken down -- although a later news report said the walkout had been averted.

Traders were also digesting a mixed weekly inventory report from the U.S. Energy Department's Energy Information Administration.

"There was a smaller-than-expected drop in crude supplies and a reasonably healthy rise in distillates," said Mark Pervan, a senior commodity strategist at ANZ Bank in Melbourne, Australia.

The EIA report said crude oil supplies fell 1.2 million barrels last week, less than the 2 million barrel decline expected by analysts surveyed by energy research firm Platts, and inventories of distillates, which include heating oil and diesel fuel, rose 2.6 million barrels -- more than expected.

Still, Vienna's JBC Energy, in its daily report, said the U.S. stock draw was significant when expressed in year-on-year terms, nothing that "crude oil stocks have fallen sharply by around 53 million barrels compared to end June 2007."

Gasoline supplies fell 1.2 million barrels last week, where analysts were expecting an increase of nearly 1 million barrels. However, the EIA also said demand for gasoline is down 1.8 percent, on average, over the last four weeks compared with last year.

Prices were also being restrained by expectations of production increases from Saudi Arabia, the world's largest oil producer. The Saudis are planning a meeting of oil producing and consuming nations in Jeddah on Sunday to seek ways to tackle soaring oil prices.

Over the weekend, Saudi Arabia reportedly told U.N. Secretary-General Ban Ki-moon that it would increase oil output by 200,000 barrels a day, or by 2 percent, from June to July. In May, the country raised production by 300,000 barrels a day.

"The market would be skewed towards seeing lower prices on the basis that OPEC is trying to manufacture some announcement to cool the market," Pervan said.

In other Nymex trading, gasoline futures and heating oil were little changed at $3.4707 and $3.8653 a gallon. Natural gas futures rose more than 8 pennies to $13.294 per 1,000 cubic feet.

In London, Brent crude futures slipped by 32 cents to $136.12 a barrel on the ICE Futures exchange.

[Associated Press; By GEORGE JAHN]

Associated Press writer Gillian Wong contributed to this report from Singapore

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