Oil prices mixed ahead of contract expiry

Oil prices were mixed in Asian trading Friday ahead of the May futures contract's expiry.

Light, sweet crude for May delivery, due to expiry later Friday, rose 31 cents to US$62.14 a barrel on the New York Mercantile Exchange midafternoon in Singapore.

"Today's modest rise comes due to short-covering ahead of expiry later, while June, July contracts are down on roll-over from May," said Ken Hasegawa of Tokyo brokerage Himawari CX. Short positions are bets that prices will fall, and when traders cover, or buy back, those short sales, prices rise.

The June contract, which moves to the front month Monday, slipped 17 cents to US$63.15. Hasegawa said June crude prices are likely to remain lower with little news to prompt fresh buying.

Brent crude for June slipped 4 cents to US$65.90 a barrel at London's ICE Futures exchange.

The May contract tumbled more than US$1 Thursday to a one-week low, settling at US$61.83 a barrel, as traders focused on inventory buildups at a key Oklahoma oil terminal.

Also stoking inventory concerns was Enbridge Inc.'s announcement that it reopened a pipeline that had been closed due to a leak on Sunday. The line is used to move crude oil from Canada to the Midwest.

Prices were also weighed down by a consultant's report that Iraq oil reserves could be much larger than initially expected, and reports that China may take more serious steps to slow its economic growth, using less oil. China's gross domestic product grew 11.1 percent in the first quarter.

Crude oil prices have slumped more than 6 percent since March 29, when they hit a six-month closing high on concern Iran's capture of 15 U.K. marines and sailors could lead to armed conflict.

Geopolitical factors continue to be a concern for the market as traders look to the situation in Nigeria, where there have been scattered reports of violence this week ahead of Saturday's presidential elections.

Nigeria is the world's eighth-largest oil exporter and a main supplier to the United States. Last week, 21 Nigerians were killed in violence surrounding state elections.

In other Nymex trading, heating oil futures fell marginally to US$1.8024 a gallon (3.8 liters) while natural gas prices dropped 2.6 cents to US$7.466 per 1,000 cubic feet.