Oil rises to near $70 on another attack in Nigeria

Oil prices rose to near $70 a barrel Monday on news that militants in Nigeria attacked an offshore oil platform belonging to Royal Dutch Shell PLC.

Traders also were awaiting a fresh batch of economic indicators due later this week for signs of improvement in the U.S. economy.

By mid-afternoon in Europe, benchmark crude for August delivery was up 64 cents to $69.80 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, the contract peaked at $70.06. On Friday, it fell $1.07 to settle at $69.16.

Shell spokesman Precious Okolobo confirmed the militants’ attack early Monday on the company’s facilities and said production had been partially shut down.

The Movement for the Emancipation of the Niger Delta is one of the main militant groups which have caused significant damage to the oil infrastructure in Nigeria, Africa’s largest crude exporter.

The rebel groups want the government to increase the share of oil revenues of the oil-rich but otherwise poor states in the country’s south.

Analyst Olivier Jakob of Petromatrix in Switzerland recently estimated that Nigeria now produces about 1.4 million barrels of oil a day. Before the rebel attacks started in 2005, Nigeria’s output was about 2.5 million barrels a day.

Meanwhile, the Paris-based International Energy Agency revised downw its medium-term forecast for global oil demand, although analysts said this had little immediate impact on markets.

The IEA said demand is likely to grow by an average of 0.6 percent annually over the 2008-2014 period. It would reach 89 million barrels a day by 2014 assuming a return to 5 percent annual economic growth by 2012, the agency said.

Oil prices yo-yoed near $70 a barrel last week as investors weighed mixed signals on whether the U.S. economy, the world’s largest, is poised to climb out of its worst recession in decades.

Investors will be eyeing economic data this week, including the Labor Department’s June unemployment report. The jobless rate hit a 25-year high of 9.4 percent in May, jumping from 8.9 percent the previous month.

The latest indicators of consumer confidence and manufacturing will also be released.

Crude has doubled since March, leading some analysts to predict oil will pullback until definitive signs of economic growth emerge.

“There’s concern about sluggish oil demand,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. “Unless we see data that shows a clear economic recovery, prices may have peaked in the short-term.”

“The oil price rally is running out of steam.”

In other Nymex trading, gasoline for July delivery gained 2.17 cents to $1.8958 a gallon and heating oil rose 1.74 cent to $1.7477.

Natural gas for July delivery fell 7.4 cents to $4.031 per 1,000 cubic feet, as the IEA projected that natural gas demand this year would drop for the first time in 50 years.

In London, Brent prices rose 69 cents to $69.61 a barrel on the ICE Futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.