Oil prices steady as market eyes Nigeria

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Investors are closely watching developments in Nigeria, but are not convinced that lost oil production in Africa's largest oil producer will resume anytime soon, analysts say.

Royal Dutch Shell PLC said Thursday it cannot meet contractual obligations to export oil from a Nigerian oil field following a militant attack, and news reports say Chevron Corp. has been forced to shut down a Nigerian oil facility, also after a militant attack. Chevron's workers in Nigeria also reportedly walked off the job Monday after talks broke down.

"Markets are still concerned about oil supply, particularly after disruptions last week in Nigeria," said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.

Light, sweet crude for August delivery rose 16 cents to $136.90 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract rose $1.38 to settle at $136.74 a barrel Monday.

The production outages in Nigeria appeared to overshadow Sunday's ceasefire declaration by the Movement for the Emancipation of the Niger Delta, or MEND, the largest militant group in Nigeria. Attacks by MEND have sliced about one quarter from Nigeria's normal oil daily oil output, helping buoy crude prices in international markets.

EU nations approved new sanctions Monday against Iran, imposing additional financial and travel restrictions on a list of Iranian companies and experts including the country's largest bank. The 27-nation bloc stopped short of banning oil and gas exports from Iran, OPEC's second-largest producer, in response to its nuclear program plans.

The crude futures market was also showing disappointment over Saudi Arabia's modest production increase announced Sunday at a meeting of oil producing and consuming nations. The kingdom said it would pump more crude oil this year if the market needs it, but its pledge fell far short of U.S. hopes for a larger increase.

"The Saudi hike in output that they announced on Sunday is not enough to cause prices to come down," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Saudi Arabia said it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it first announced in May, raising total daily output to 9.7 million barrels.

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