Oil prices slipped slightly on Monday after a threat to Nigerian crude flows receded, but lingering concerns of a possible severe disruption to supplies ahead of winter held the market close to $50 a barrel.
US light crude slid 37 cents to $49.75 a barrel, while London's Brent crude fell 43 cents to $46.19 a barrel. Oil came under some selling pressure after rebels in Nigeria withdrew a threat to shut oil operations in the world's seventh-biggest exporter as part of a peace deal negotiated with the government.
The agreement, struck on Friday, was enough to avert an imminent explosion of violence in the oil-producing Niger delta, a delegate to the talks said, but was a long way from resolving all the misgivings of its impoverished inhabitants.
The threat to Nigerian crude flows of about 2.3 million barrels per day (bpd) came at a time when producers are pumping almost at full tilt, leaving little slack in the system, and drove up US crude prices to a record $50.47 last week.
"The Nigeria situation seems to be resolved but it will remain a hotspot and, as we head into winter with low stocks and little spare production capacity, there's potential for a severe supply problem," said Tony Nunan at Mitsubishi Corp in Tokyo.
"Any kind of incident on the supply side will take crude to $52." Nigeria's top oil producer, Royal Dutch/Shell Group, said it was monitoring the security situation in the delta before returning some 300 workers evacuated last month to escape clashes between rebels and troops.
"There is relative calm, but we need to see how sustainable it is before resuming those operations," said a Shell spokesman.
G7 CALLS FOR MORE SUPPLIES: The world's top economic leaders from the Group of Seven countries on Friday urged oil producers to pump more crude to bring down prices, which threaten to stunt economic growth.
"Oil prices are high and remain a risk," said a communiqué after talks between finance ministers and central banks from the G7 nations Britain, Canada, France, Germany, Italy, Japan and the United States.
"So first, we call on oil producers to provide adequate supplies to ensure that prices moderate," the closing communiqué said. "Second, it is important consumer nations increase energy efficiency."
Qatar, the smallest producer in the Organisation of the Petroleum Exporting Countries, said on Monday it was pumping at a maximum rate of 800,000 bpd and the Opec cartel had done all it could to cool down soaring prices.
"We are very concerned about high oil prices. We and Opec members have done everything we can to cool down the market and we will do everything we can do," Oil Minister Abdullah bins Hammed al-Attiyah told Reuters in Tokyo.
"We are the smallest producer in Opec, but even Qatar is producing crude oil at maximum to provide confidence to the market as well as our customers," said Attiyah, who was in Japan to talk to oil and gas buyers.
Last week, top exporter Saudi Arabia said it was boosting production capacity to 11 million bpd in response to oil's record surge above $50. The kingdom is pumping 9.5 million-bpd.
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