Oil edged higher on Tuesday, as tensions in Iran and Nigeria raised supply worries, although gains were limited ahead of the release of US oil inventory data this week, which is expected to show weakening demand. US light crude for September delivery was up 58 cents at $125.31 a barrel by 0709 GMT. It rose on Monday, settling up $1.47 at $124.73.
London Brent crude was up 65 cents at $126.49 a barrel, after settling up $1.32 on Monday. "Tensions over Iran's nuclear programme and attacks on Nigerian pipelines have increased supply worries," said Tasuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo.
Iranian President Mahmoud Ahmadinejad was quoted on Saturday as saying that Iran has more than 5,000 active centrifuges for enriching uranium, keeping the focus on geopolitical concerns. But Iran appears to have overstated the expansion of its uranium enrichment programme as the International Atomic Energy Agency checked and could verify just 4,000 were installed, 3,500 of which were regularly enriching uranium, a diplomat close to the UN nuclear watchdog agency said on Monday.
The main militant group in Nigeria's Delta region said on Monday that it had attacked two Royal Dutch Shell pipelines. Shell said it halted some production due to the incident but declined to say how much. But gains have been limited somewhat by expectations that demand is shrinking in the United States - a trend that has contributed to a sell-off in prices since hitting a record high earlier this month.
A Reuters preliminary poll ahead of Wednesday's US Energy Information Administration inventory report calls for crude to fall 1.4 million barrels, gasoline to be down 100,000 barrels, and distillates to rise 1.7 million barrels. Analysts said the market would also be keenly watching US gross domestic production (GDP) data and payroll report due out Thursday and Friday respectively.
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