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World oil prices sank on Monday following the end of a general strike in Nigeria that had threatened exports from the sixth-biggest crude producer in the world.
World oil prices sank on Monday following the end of a general strike in Nigeria that had threatened exports from the sixth-biggest crude producer in the world.
Brent North Sea crude for August delivery lost 95 cents to 70.23 dollars per barrel in electronic deals. New York's main oil futures contract, light sweet crude for delivery in August, fell by 1.09 dollars to 68.05 dollars per barrel in floor trading.
"Crude futures were lower today (Monday), coming off after Nigerian unions ended a general strike which threatened to disrupt oil exports from the country," said Sucden analys,t Michael Davies. Despite Monday's losses, crude futures remain within reach of their highest readings for more than nine months, trading close to 69 dollars a barrel in New York and not far off 72 dollars in London.
The London-based Centre for Global Energy Studies warned on Monday that the price of oil will soar in the coming months unless the OPEC crude cartel ramps up output.
"The world needs more oil if another price surge is to be avoided," the influential energy research group said in a monthly report.
"Oil prices will continue to rise over the summer unless OPEC relaxes its production restraint." Prices had surged before the weekend as traders fretted over possible disruptions to energy supplies from Nigeria. However, Nigerians returned to work on Monday, two days after the country's two main trade unions ended a four-day general strike that had paralysed economic and commercial activities.
The strike caused economic activity with the notable exception of Nigeria's oil industry to grind to a halt. Nigeria, Africa's largest producer with 2.6 million barrels per day of crude, is already losing 25 per cent of its exports to unrest in the country's oil-producing south. "It might ease things a little bit but more generally, the strike itself has highlighted the risk around Nigerian (oil) production a bit more," said Gerard Burg, an energy and minerals economist with National Australia Bank in Melbourne.
"There has been no let up in the civil violence there and it continues to disrupt production ... I think production generally remains at risk in Nigeria." Oil prices were meanwhile underpinned by concerns about US refinery utilisation as the peak demand summer driving season gets underway. Gasoline inventories in the United States remain significantly low for the time of year, despite increasing recently, as a series of refiner outages have affected production of the motor fuel throughout this year.