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Oil above $66 on Nigeria concern, but stocks weigh

Written by: Staff

LONDON, Apr 5 (Reuters) Oil climbed back above a barrel on Wednesday as the difficulty of restoring Nigerian output shut in by militant unrest and concerns offset the impact of rising U.S. crude inventories.

U.S. light sweet crude oil futures for May delivery rose two cents to .22 a barrel, while London Brent crude rose 17 cents to .56 by 1223 GMT.

Prices recovered from a sell-off on Tuesday after news a meeting between the Nigeria government and groups from the oil-producing delta was unlikely to achieve anything because key players from the militant side would be absent.

''We dissociate ourselves from the Abuja jamboree ... which is a waste of time and resources,'' said activist group Ijaw Youth Leaders Forum in a statement.

Supplies from Nigeria, the world's eighth biggest oil exporter, have been cut by more than 500,000 barrels per day for almost two months because of militant attacks.

Industry sources said on Wednesday, Royal Dutch Shell and other companies had no plans to return their staff to abandoned oilfields in Nigeria's southern delta until there was a truce with militants.

But Nigerian Oil Minister Edmund Daukoru said he expected production to be restored on Thursday at Shell's EA oilfield, which normally pumps about 115,000 bpd.

Although oil markets are generally well-supplied, worries about Nigeria and fellow-OPEC producer Iran, which is embroiled in a dispute with the west over its nuclear programme, have prevented prices from falling far.

''It's a fight between oversupply in the market, building inventories and geopolitical risks,'' said Michael Lewis, global head of commodity research at Deutsche Bank.

According to a Reuters survey of analysts, weekly inventory data to be released on Wednesday will show a 1.1 million-barrel increase in crude oil stocks, which touched a seven-year high a month ago.

But gasoline and distillate stocks were both expected to have fallen by 1.6 million barrels last week. [EIA/S] Daukoru, who is also OPEC president, said gasoline supplies could be tightened by refining bottlenecks, especially as peak U.S. driving season approaches.

''OPEC can supply more if more OPEC oil is called for,'' Daukoru, who is also Nigeria's oil minister, told reporters on the sidelines of an African energy conference in Algiers.

''But if the downstream cannot process what we place on the market, it is useless to ask OPEC to produce more.'' REUTERS CS BS2051

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