LONDON (Reuters) – Oil slid below $72 on Tuesday after hitting a 10-month high the previous session, but losses were limited by a strike call in Nigeria that could further hobble output in the world’s eighth biggest crude oil exporter.
The planned protest from Wednesday, which poses a challenge to newly inaugurated President Umaru Yar’Adua, came after more violence flared in the oil-producing Niger Delta at the weekend.
London Brent crude, currently a better indicator of the global market than U.S. oil, fell 30 cents to $71.88 a barrel by 0835 GMT. It touched an intra-day peak of $72.25 on Monday, its highest since August 28.
U.S. crude eased 31 cents to $68.78 a barrel, paring some of Monday’s $1.09 rise, the fourth day of a rally that has lifted prices by nearly $4.
“At the moment it’s all about what’s happening in Nigeria, the potential for a real strike there is helping prices up,” said Andrew Harrington, analyst from ANZ Bank in Australia.
Nigerian unions have said they will start an indefinite general strike from Wednesday that will include the oil sector.
The head of the International Energy Agency, representing the interests of 26 consumer nations, urged OPEC to raise production to increase oil supplies.
“They need to increase output as soon as possible,” Claude Mandil told Reuters.
Armed militants stormed two Western oil facilities in the oil producing Niger delta in recent days, cutting a further 82,000 barrels per day (bpd) of output in Africa’s biggest producer and taking total shut production to some 756,000 bpd.
Barclays Capital technical analysts said prices appeared to be resuming an upward march that has lifted oil from around $50 in January. “(There are indications) the uptrend is resuming after a period of range trading,” they said in a research note.
Weekly U.S. oil stocks data due on Wednesday will also influence market direction in the short term.
Analysts expect gasoline and distillate stocks to have risen from last week as refinery operations recover from unseasonally low level, according to a preliminary poll.
Crude stocks were seen marginally higher.
Violence in the Gaza Strip has also rattled traders, although analysts said there was little indication of the power struggle spilling over to neighboring oil-producing countries.
U.S. crude hit a record high of $78.40 a barrel nearly a year ago on fears that fighting between Israel and Lebanese Hezbollah guerrillas could spread to Middle East oil producers.
OPEC member Iran said it wants a price that preserves the producer group’s market share and oil income. Iran’s OPEC governor said in remarks published on Tuesday that a price below $55 will hurt oil investment and above $75 will change consumers’ energy policy.