May 28, 2007 11:28 am US/Eastern
Oil Prices Retreat After Nigeria Strike
VIENNA, Austria (AP) ―
Oil prices fell in light trade Monday, eased by the end of a Nigerian oil workers' strike over the weekend.
Still, with the Memorial Day weekend formally signaling the start of the U.S. driving season, the market anticipated potential upswings in prices believing that that Americans were ready to take to the highways — despite near-record gasoline prices.
"Over the Memorial Day weekend, some 32.1 million Americans were expected to cover distances of 50 miles or more," Vienna's PVM Oil Associates said, citing the American Automobile Association. "This represents a 1.8 percent increase from last year's level."
But with Nigerian pressures easing, light, sweet crude for July delivery dropped 69 cents to $64.51 a barrel on the New York Mercantile Exchange by afternoon in Europe. The contract climbed more than $1 to $65.20 a barrel Friday before the U.S long weekend.
Brent crude contracts for July delivery fell 97 cents to $69.72 a barrel on the ICE Futures exchange in London.
Nigerian labor union officials ordered oil workers back to work Saturday after the government agreed to a 15 percent raise for all employees of the Nigerian National Petroleum Company. The unions began the strike Thursday and threatened to target exports in hopes of reversing the sale of government refineries.
"The market is primarily adjusting to the news over the weekend that the Nigerian oil strike ended, and so one factor that had been threatening the market was removed," said Victor Shum, energy analyst with Purvin & Gertz in Singapore.
Nigeria's state oil company holds the majority stake in joint ventures with international oil companies that account for more than 90 percent of the country's oil exports. The strike did not affect crude output from Africa's biggest producer.
Weather forecasts predicting above normal hurricane activity this year will remain a factor influencing oil prices but are not driving the market at this time, Shum said.
The U.S. government has predicted 13 to 17 tropical storms for this year, with seven to 10 of them becoming hurricanes. The likelihood of above normal hurricane activity is 75 percent, the National Oceanic and Atmospheric Administration said last week.
In other Nymex trading, heating oil futures were down by more than 3 cents to $1.9085 a gallon (3.8 liters), and natural gas prices fell 5 cents to $7.590 per 1,000 cubic feet.
(© 2007 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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