Oil steady as US crude stocks cushion Nigeria risk

SINGAPORE, June 22 (Reuters) Oil prices steadied on Friday above a barrel as a strike continued in the world's eighth-largest exporter Nigeria, but traders saw inflated U.S. crude stockpiles as cushioning any potential supply losses.

London benchmark Brent crude currently seen as the best indicator of world oil prices, rose 6 cents to .28 a barrel by 0348 GMT, after slipping 20 cents on Thursday. U.S. light crude eased 7 cents to .58 a barrel.

Union leaders in Nigeria vowed to extend their strike to protest against a rise in fuel prices to a third day on Friday, after talks with the government ended in a stalemate.

The strike has so far spared shipments of Nigeria's gasoline-rich crude, but its government said it would no longer tolerate street blockades and intimidation by unionists, setting the stage for a more hostile face-off. Militant attacks on oil infrastructure have already cut about 25 percent of its output.

''Gasoline, Nigeria and hurricanes will support oil prices through the summer,'' said Mike Wittner at Calyon. '' The unions had threatened to withdraw workers from oil tanker terminals on Thursday to exert more pressure on the government, but shipping agents and oil officials said loadings in Africa's top producer went ahead normally.

The market has pulled back from a 10-month high on Monday, losing nearly SINGAPORE, June 22 (Reuters) Oil prices steadied on Friday above $70 a barrel as a strike continued in the world's eighth-largest exporter Nigeria, but traders saw inflated U.S. crude stockpiles as cushioning any potential supply losses.

London benchmark Brent crude currently seen as the best indicator of world oil prices, rose 6 cents to $70.28 a barrel by 0348 GMT, after slipping 20 cents on Thursday. U.S. light crude eased 7 cents to $68.58 a barrel.

Union leaders in Nigeria vowed to extend their strike to protest against a rise in fuel prices to a third day on Friday, after talks with the government ended in a stalemate.

The strike has so far spared shipments of Nigeria's gasoline-rich crude, but its government said it would no longer tolerate street blockades and intimidation by unionists, setting the stage for a more hostile face-off. Militant attacks on oil infrastructure have already cut about 25 percent of its output.

''Gasoline, Nigeria and hurricanes will support oil prices through the summer,'' said Mike Wittner at Calyon. '' The unions had threatened to withdraw workers from oil tanker terminals on Thursday to exert more pressure on the government, but shipping agents and oil officials said loadings in Africa's top producer went ahead normally.

The market has pulled back from a 10-month high on Monday, losing nearly $2 in a three-day slide, pressured mid-week by an unexpected jump in U.S. crude stockpiles that took them to the highest in nine years on abundant imports and low refinery use.

This furthered OPEC's case that the supply situation is healthy and tight gasoline stocks are due to a lack of refining capacity.

''There is a lot of oil on the market, the stocks are very high,'' OPEC Secretary-General Abdullah al-Badri said on Thursday.

''If we add more oil, it would not go to the refineries -- it would go to the stocks.'' U.S. gasoline stocks rose last week but remained more than 5 percent below last year amid peak summer demand, as refineries have been hit by a series of outages.

Refiners are also struggling to build up stocks of heating oil, which declined last week to be 38 percent below this time last year.

Analysts said worries over Iran's nuclear dispute, the Gulf of Mexico hurricane season and flat non-OPEC supply against a backdrop of growing demand are also supporting prices.

REUTERS KK VC1003 in a three-day slide, pressured mid-week by an unexpected jump in U.S. crude stockpiles that took them to the highest in nine years on abundant imports and low refinery use.

This furthered OPEC's case that the supply situation is healthy and tight gasoline stocks are due to a lack of refining capacity.

''There is a lot of oil on the market, the stocks are very high,'' OPEC Secretary-General Abdullah al-Badri said on Thursday.

''If we add more oil, it would not go to the refineries -- it would go to the stocks.'' U.S. gasoline stocks rose last week but remained more than 5 percent below last year amid peak summer demand, as refineries have been hit by a series of outages.

Refiners are also struggling to build up stocks of heating oil, which declined last week to be 38 percent below this time last year.

Analysts said worries over Iran's nuclear dispute, the Gulf of Mexico hurricane season and flat non-OPEC supply against a backdrop of growing demand are also supporting prices.

REUTERS KK VC1003