Oil prices rebound, end higher on Nigerian oil company move

Source: Agencies  |   2008-6-13  |     ONLINE EDITION

OIL prices rebounded from a steep early loss to end modestly higher yesterday in another volatile session fueled by a rising dollar and concerns about supplies.

Light, sweet crude for July delivery rose 36 cents to settle at US$136.74 a barrel on the New York Mercantile Exchange.

Prices recovered from an earlier dip as low as US$131.55 on reports that Nigeria's state owned oil company will take over oil operations in parts of the country from a Royal Dutch Shell PLC joint venture, a move traders believe could cut output. Analysts said word of a possible strike by Nigerian oil workers contributed to oil's US$5 rally from the day's lows, as did psychological factors: When prices failed to drop all the way to US$131, many investors took that as a sign to buy.

Given the volatile price moves of recent days, analysts saw few signs of a changing trend in yesterday's trading. Prices have gone through several sharp swings over the past week, rising more than US$16 last Thursday and Friday, falling more than US$7 earlier this week, and jumping back more than US$5 on Wednesday.

Analysts say oil is range trading, waiting for direction from a significant move in the dollar or change in supply and demand fundamentals.

Many analysts believe the market's overall sentiment remains bullish, and that new records are a real possibility in coming days. Oil reached its latest trading record of US$139.12 on Friday.

"The price movement of crude has been ... dictated by what we've seen in the greenback," said Edward Meir, an analyst at an analyst at MF Global UK Ltd., in a research note.

Yesterday, the dollar gained ground after the Commerce Department said retail sales rose in May by the biggest amount in six months as 57 million tax rebate checks reached consumers. The 15-nation euro fell to US$1.5423 from US$1.5571 late Wednesday.