Oil rises above $70 on weaker dollar, Nigeria risk

Oil prices rose above $70 a barrel Thursday amid a weakening U.S. dollar, mixed crude inventory data and a decision by Nigeria’s main rebel group to resume attacks next week on the country’s oil industry.

By mid-afternoon in Europe, benchmark crude for November delivery was up 74 cents at $70.31 in electronic trading on the New York Mercantile Exchange. The contract lost $1.31 to settle at $69.57 on Wednesday.

A slide in the U.S. dollar has helped bolster oil prices, which are traded in the American currency. The euro rose to $1.4794 on Thursday from $1.4687 the previous day and the British pound was also higher at $1.6061 compared with $1.5876. The dollar slipped to 88.29 Japanese yen from 88.60 yen.

Investors were also digesting mixed signals in Wednesday’s crude supply numbers from the Energy Information Administration. Gasoline inventories grew by 2.9 million barrels last week and distillate fuel supplies grew by 700,000 barrels, both bigger increases than analysts expected.

But crude supplies dropped by 1 million barrels, while analysts had expected a gain of 1.9 million barrels.

Overall, the situation with U.S. supplies had not really changed, said Olivier Jakob of Petromatrix in Switzerland.

“There is not enough underlying demand so the draws of crude oil are offset by a build of products,” Jakob said. “The combined stocks of crude and clean petroleum products are back to being close to the record highs seen earlier in the year.”

Helping oil prices were fresh figures showing that the number of newly laid-off U.S. workers filing first-time claims for jobless benefits fell to the lowest level since early January, as layoffs ease a bit amid a fledgling economic recovery.

The fourth drop in new claims in five weeks is a sign the labor market is slowly healing. But employers are reluctant to hire new workers and the unemployment rate is expected to keep climbing well into next year.

In Nigeria, the Movement for the Emancipation of the Niger Delta said in a statement late Wednesday that it would burn down all oil installations it has attacked in the past and will no longer limit attacks to pipelines.

Attacks from MEND and unrest in the Delta region have cut Nigeria’s oil production by about a million barrels a day, allowing Angola to overtake it as Africa’s top oil producer.

Recent amnesty deals between the government and some rebel groups had offered hopes of increased oil production, but MEND’s announcement renewed market concerns.

“It looks like it is too early to take Nigeria off the bulls’ list of global hot spots,” said JBC Energy in Vienna.

In other Nymex trading, heating oil rose 1.03 cents to $1.7914 a gallon. Gasoline for November delivery gained 1.32 cents to $1.7335 a gallon. Natural gas for November delivery jumped 11.9 cents to $5.023 per 1,000 cubic feet.

In London, Brent crude rose 92 cents to $68.12 on the ICE Futures exchange.

Copyright 2009 The Associated Press.