Oil rises but still below $72

LONDON (AFP) - Oil prices rose Monday on supply concerns as militants operating in Nigerias key oil-producing region ended a ceasefire and Royal Dutch Shell was forced to cut output after a pipeline was sabotaged. New Yorks main futures contract, light sweet crude for delivery in March, gained 32 cents to 73.21 dollars a barrel at about 1200 GMT after dipping by a similar amount during Asian trading hours. Brent North Sea crude for March rose 36 cents to 71.82 dollars. A spokesman for the Anglo-Dutch group Shell told AFP on Monday that it had shut in some output as a result of the vandalisation of the Trans Ramos pipeline at the weekend. Shell refused to disclose the production loss suffered while the spokesman could not say if the Jan 30 incident was a militant attack. However, the sabotage came just hours after southern Nigerias most active armed group MEND called off a unilateral ceasefire it declared on October 25. On the bullish (supportive) side (for prices) MEND, the Nigerian militants called off its 3-month ceasefire and threatened to renew attacks on oil installations, said Tamas Varga, an analyst at energy consultants PVM Oil Associates. The Movement for the Emancipation of the Niger Delta said it would resume all-out violent attacks on Nigerias oil industry, claiming it had received no effective peace dividend from the truce. Armed groups claiming to seek a fairer share of oil revenue for locals have since 2006 staged attacks on oil installations in the Niger Delta, playing havoc with crude output and prices. At the peak of the attacks, the violence slashed Nigerias crude production by about one million barrels a day, allowing Angola to overtake it as Africas top oil producer. Mondays developments meanwhile come after Shell last week agreed to sell certain assets in Nigerias troubled delta region to a local consortium. The Shell Petroleum Development Company of Nigeria Ltd on Friday said it had agreed to transfer its interest in three production licences and related equipment in the Niger Delta to a consortium led by two Nigerian companies. This sale of assets supports the Nigerian governments goal of expanding opportunities for local energy companies, Mutiu Sunmonu, SPDC managing director, had said on Friday. Elsewhere on Monday, investors remained concerned over low demand even as the US, the worlds largest energy consumer, reported on Friday that its economy grew a much faster-than-expected 5.7pc in the fourth quarter. Tony Nunan, a risk manager with Mitsubishi Corp, said that although US fourth economic growth was good, underlying energy demand remained weak in the worlds biggest economy and stockpiles were high. The oil market is still concerned about the high (oil) inventories and the economic recovery, Nunan said.

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