SINGAPORE (Reuters) -Oil surged 1 percent to above $72 a barrel on Monday as a refinery fire in Italy added fresh concerns to a market already nervous over Iran’s defiant pursuit of its nuclear program and militant violence in Nigeria.
A weekend fire that shut ERG group’s 160,000 barrel per day (bpd) Impianti Nord refinery in Sicily renewed concerns about gasoline supply ahead of the summer season, when European plants help meet peak season U.S. demand.
U.S. light, sweet crude jumped 79 cents or 1 percent to $72.63 a barrel by 0850 GMT, adding to a 91-cent gain on Friday that helped limit last week’s losses to 4.4 percent. Trading was thin due to holidays in much of Asia and Europe.
IPE Brent crude was up 74 cents at $72.76, with gas oil futures leading the charge with a 1.75 percent or $11 a tonne rally to $638.75 a tonne.
An ERG company source said the Impianti Nord refinery was shut down due to a fire that started on Sunday.
There was no information on the larger, neighboring 240,000 bpd Isab Sud refinery, which had been shutting for a major 47-day maintenance overhaul from the end of last week.
“It’s all to do with the refinery in Sicily,” said Rob Laughlin of brokers Man Financial in London. “The lack of players is obviously exaggerating the gas oil move.”
The rally helped staunch a tumble from a record $75.35 a barrel price a week ago as dealers took profits and grew more confident about summer gasoline supplies, partly because of U.S. President George W. Bush’s call to temporarily ease fuel standards.
But geopolitical jitters provided a solid base, analysts said, preventing prices from retracing much of the more than $11 gains they have registered this year.
“I think the oil market is in for a period of consolidation for a few days,” said Tobin Gorey of the Commonwealth Bank of Australia. “I don’t think there’s any real interest in getting a sustained short on because it’s simply too dangerous.”
While oil prices look to be well supported at above $70, the momentum of a rally that had added $15 to prices from March 21 to April 21 had faded, Gorey added.
IRAN, NIGERIA IN FOCUS
Iran, which the world’s nuclear watchdog said last week had ignored calls to abandon its atomic program, vowed on Sunday to carry on pursuing a nuclear fuel cycle and to strike back if it is attacked.
U.N. ambassadors from the United States, Britain and France are expected to introduce this week a Security Council resolution to legally oblige Iran to comply with demands to halt enrichment.
Failure to do so could result in limited sanctions, although Russia and China — the other two veto-wielding council members — say they do not favor such a move for now.
If the Security Council moves too slowly, the United States is ready to take steps outside the U.N. to stop Iran from developing nuclear weapons, U.S. Secretary of State Condoleeza Rice said.
Ongoing violence in Nigeria, where militants have succeeded in cutting production by a quarter, added support.
The Movement for the Emancipation of the Niger Delta, which wants more local control over the southern delta’s oil wealth, said it had detonated 30 kg (66 lb) of dynamite in a car bombing close to a refinery in the oil capital of Warri.
There were no casualties, an army spokesman said.
The militants said it was a warning to oil industry workers and investors, singling out the Chinese government, which last week clinched a multi-billion dollar deal for access to oil acreage.