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Global oil prices jump to 11-month highs


NEW YORK 07 09 07

Global oil prices surged Friday to their highest level in nearly a year, driven by heightened unrest in Nigeria and concerns about low US gasoline supplies.

New York's main oil futures contract, light, sweet crude for delivery in August, closed one dollar higher at 72.81 after rising to an intraday high of 72.94 dollars -- the highest level since August 25, 2006.

In London, Brent North Sea crude for August delivery gained 87 cents to settle at 75.62 dollars per barrel. Earlier it had reached 76.01 dollars for the first time since August 11.

"Obviously, growing anxiety over the global supply situation is swelling the security premium," said Michael Fitzpatrick of Man Financial.

"With violence in Nigeria escalating this week following the end of a month-long truce between government and militant leaders, OPEC's unwillingness to raise output and Iran facing another round of sanctions, are all adding to a conclusion that oil will be increasingly seen as a vehicle for political leverage," he said.

In southern Nigeria, gunmen who kidnapped a three-year-old British girl have threatened to kill her unless her father takes her place, her mother said on Friday, as unrest continued to blight Africa's biggest crude producer.

Prices also were supported by a US Department of Energy (DoE) report Thursday showing American gasoline (petrol) reserves were about 4.2 percent below their level at the same time last year.

BNP Paribas analyst Harry Tchilinguirian said fresh violence in Nigeria has been bullish for prices because Nigerian crude has a high gasoline content and US refinery output has been hampered by outages.

"So it's a low (US) gasoline situation, and you are also removing from the market crudes which have a high gasoline content, so people are going to turn to the next alternative -- and that's Brent."

The main separatist group in the oil-rich Niger delta meanwhile condemned the kidnapping of three-year-old Margaret Hill, and said they would hunt down her abductors as authorities stepped up efforts to secure her release.

Nigeria is the world's eighth-largest exporter of crude oil. But its daily exports of 2.6 million barrels have been reduced by a quarter because of unrest in the oil-producing south.

The Brent oil price is now just a few dollars off its record high of 78.64 dollars per barrel, struck at the start of August 2006. But New York crude has some ground to cover before reaching its historic peak of 78.40 dollars per barrel, set in mid-July 2006.

"What is key is the fact that you don't have that much spare crude production capacity in the system," Tchilinguirian said.

"Any further geopolitical event that comes close to impacting supplies is going to push the price higher."

The United States is currently facing its annual peak demand for gasoline as drivers take to the roads en masse for their summer vacations.

The DoE had said Thursday that American gasoline inventories jumped by 1.8 million barrels to 204.4 million barrels in the week ending June 29, more than triple market expectations for a gain of 500,000 barrels.

Despite the gains, inventories remain below levels of a year earlier.

US crude oil stockpiles, meanwhile, leapt by 3.1 million barrels to 354 million barrels, according to the DoE. The figure surprised the consensus analyst forecast of a 200,000-barrel decline.

AFP 06 1956 GMT 07 07

Copyright© 2007 AFP. All Rights Reserved.



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