Oil up to near $72 on dollar fall, Nigeria attack

[June 30, 2009]  BANGKOK (AP) -- Oil prices rose to near $72 a barrel Tuesday after briefly jumping above $73 as a weakening U.S. dollar and attacks on oil installations in Nigeria helped push prices to eight-month highs.

Analysts also said prices were boosted by speculative trades and portfolio positioning by investment funds, which typically intensify at the end of a fiscal quarter.

By midday in Europe, benchmark crude for August delivery was up 23 cents to $71.72 a barrel in electronic trading on the New York Mercantile Exchange after trading as high as $73.38 earlier in the session. On Monday, it gained $2.33 to settle at $71.49.

The Schork Report edited by U.S. trader and analyst Stephen Schork said the gains by crude may have been linked to "the desire of fund managers to get some energy exposure into their portfolios ahead of the close of business (Tuesday)."

"There is still a lot of oil out there ... and demand for it is still very questionable," Schork said.

He downplayed the events in Nigeria and their effect on the market, pointing out that Nigeria's share of the U.S. import market had dropped from 11 percent to 6 percent in the past year.

On Monday, Nigerian militants partly damaged and shut down a Royal Dutch Shell offshore oil platform. Nigeria is Africa's largest oil producer.

"For all intents and purposes, the ... turmoil in Nigeria hurts that country more so than the United States," Schork said.

U.S. energy consultancy Cameron Hanover mirrored Schork's view on the lack of influence of supply and demand on the market, saying that fundamentals had been "relegated to cocktail conversation in the actual movement of oil prices."

Oil has surged from below $35 in March in part on investor concern that massive U.S. fiscal stimulus spending will eventually spark high inflation. Investors often buy commodities such as crude as a hedge against a weakening dollar and inflation.

The euro gained to $1.4140 on Tuesday from $1.4078 on Monday.

Crude trading volume was about three times more than normal Tuesday in Asia, said Clarence Chu, a trader at market maker Hudson Capital Energy in Singapore.

China boosted state-set gasoline and diesel prices Tuesday to reflect rising global crude costs, days after indicating plans to increase its strategic crude oil reserves by 60 percent over the next five years.

The government raised the retail price of gasoline by 8.6 percent and diesel by 9.6 percent, the fourth change in prices this year.

In other Nymex trading, gasoline for July delivery rose 2.92 cents to $1.9650 a gallon and heating oil gained 1.25 cents to $1.7960. Natural gas for July delivery advanced 3.0 cents to $3.974 per 1,000 cubic feet.

In London, Brent prices weer up 15 cents to $71.14 a barrel on the ICE Futures exchange. Earlier in the session, Brent peaked at $73.50.

[Associated Press; By PABLO GORONDI]

Associated Press writer Alex Kennedy in Singapore contributed to this report.

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