Oil prices held firm near the previous day's 10-month high on Friday as threats in Nigeria added to fears that strong summer demand in the world's top consumer could quickly drain rising US crude and fuel stocks. London Brent crude for August delivery slipped 10 cents to $74.65 a barrel after touching a 10-month high of $74.93 on Thursday.
Prices are now within sight of last year's all-time high of $78.65 on July 8. US crude held steady at $71.81 a barrel, having touched $72.35 a day ago and the peak since late August. "It's a combination of Nigeria and concerns about stocks in the US the Nigerian factor triggered prices in the midst of the summer driving season," said Gerard Rugby from Fuel First Consulting in Sydney.
The end of a one-month truce by the rebel group responsible for much of the violence directed at the Nigerian oil industry, an attack on an oil rig and the kidnapping of a 3-year-old British girl in Port Harcourt reminded dealers of the continued risk to supplies from the world's eighth-largest oil exporter. Some 700,000 barrels per day (bpd) of Nigerian production is shut in after a year and a half of attacks on the oil industry.
"Renewed attacks and kidnappings in the Niger Delta (have) dimmed fledgling hopes of a production recovery," said Antoine Half from brokers Fimat in New York. Concerns over whether US gasoline inventories could keep pace with robust demand lingered despite a higher-than-expected weekly stock rise of 1.8 million barrels reported by the US Energy Information Administration.
Stocks are below normal levels for this time of the year while gasoline demand is up 1.2 percent from last year. This year's lengthy string of refinery upsets persisted as well, with BP Plc shutting a hydrocracking unit at its 260,000 bpd Los Angeles-area refinery for unplanned repairs that might last up to 10 day, sources familiar with operations said.
Gasoline supplies world-wide are also tightening. Northwest European stock levels have fallen to a two-month low, exports from key Asian exporter China in July will drop to their lowest in 10 months and Japanese stocks this week dipped below year-ago levels for the first time this year.
With the focus on the risk to future supplies, and expectations that rising refinery runs will draw down crude stocks, traders looked beyond the bigger-than-expected 3.1 million barrels build in US crude stocks last week.
Although stocks at the Cussing, Oklahoma, delivery point eased by 400,000 barrels last week, the focus on Nigerian risks helped drive Brent gains faster than US crude, widening the European market's premium to $2.75, from $1.45 a day ago.
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