Supply concerns drive oil prices higher

Oil moved higher today as the market shrugged off rising US stockpiles to focus on renewed threats of supply disruptions in Nigeria…

Oil moved higher today as the market shrugged off rising US stockpiles to focus on renewed threats of supply disruptions in Nigeria and the scant progress in Iran's row with the West.

US light crude for April delivery was up 44 cents to $62.41 a barrel early this morning after threats of more attacks in Nigeria had pushed the contract up by 56 cents on yesterday. European crude benchmark Brent was up 63 cents to $63.08.

US oil stocks increased further with crude oil stocks up by a hefty 1.6 million barrels last week, US government data showed yesterday, to be 9 per cent above year-ago levels and well into the upper end of the average range.

Gasoline stocks rose 300,000 barrels, keeping them at the highest level since June 1999 for the third week in a row, while distillates inventories dropped 1.5 million barrels but still held above the seasonal average.

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The bearish oil stocks data was overshadowed by renewed warnings of more attacks against oil installations in Nigeria, where a fifth of output - or more than 450,000 barrels per day - has been shut for almost two weeks.

The Movement for the Emancipation of the Niger Delta, which released six of nine oil worker hostages on Wednesday, said it was concentrating its resources on "one huge crippling blow to the Nigerian oil industry" with an aim of completely discontinuing exports of onshore crude oil.

Worries over the reliability of shipments from Opec-member Nigeria, the world's eighth-largest oil exporter, have helped keep crude prices firmly above $60 a barrel.

The market is also nervous about potential supply disruption from Iran, after a meeting between Russia and Iran yesterday failed to break the deadlock over Tehran's nuclear programme.