Oil prices above $100 after attack

Business Materials 29 February 2008 02:42 (UTC +04:00)

( AP ) - Oil prices rebounded above $100 a barrel Thursday following an attack on oil installations in Nigeria.

The attack on Italian energy firm Eni SpA's Brass River terminal in Nigeria caused a production cut of about 50,000 barrels a day, Dow Jones Newswires reported.

Nigeria, the third-biggest overseas supplier of oil to the United States, has been beset by political violence since December 2005 that has targeted its oil infrastructure.

Earlier Thursday, prices had retreated on larger-than-expected increases in U.S. crude and gasoline supplies, but again approached Tuesday's record close of $100.88 a barrel. The dollar traded at fresh lows against the euro Thursday and worries about the American economy drove more money into energy futures as a hedge against inflation.

Light, sweet crude for April delivery rose 90 cents to $100.54 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Europe.

The contract fell $1.24 to settle at $99.64 a barrel Wednesday after surging as high as $102.08 a barrel, a trading record. On Tuesday, the contract jumped $1.65 to settle at a record $100.88 a barrel.

The report by the U.S. Energy Department's Energy Information Administration showed that country's crude oil inventories rose by 3.2 million barrels, or 1 percent, to 308.5 million barrels.

Although that number is slightly lower than levels a year ago, it is well ahead of the 2.4 million barrel gain analysts had been expecting, according to a survey by Dow Jones Newswires. It was the seventh straight week the report showed a rise in crude inventories, suggesting the U.S. at least has more than enough oil to meet demand.

In London, Brent crude were up 93 cents to $99.20 a barrel on the ICE Futures exchange.

The EIA data showed gasoline inventories also jumped more than expected - by 2.3 million barrels to 232.6 million barrels; analysts had expected a more modest rise of 400,000 barrels. Refinery activity also increased much more than expected.

The weakening U.S. dollar also helped prop up prices. The 15-nation euro jumped to a record $1.51 against the greenback, meaning that crude remains a relative bargain for buyers overseas. Gold - another commodity seen as a hedge against inflation - also struck a record Wednesday.

In his testimony to the U.S. Congress Wednesday, Federal Reserve Chairman Ben Bernanke warned of sluggish business growth ahead, and signaled a willingness by the central bank to cut interest rates again. But Bernanke also noted that the Fed must keep a close watch on inflation given the sharp rise in energy prices and other costs.

Heating oil futures gained 2.87 cents to $2.7998 a gallon (3.8 liters) while gasoline futures rose 0.99 cents to $2.4876 a gallon.

Natural gas futures were up 15.5 cents to $9.215 per 1,000 cubic feet.