Crude oil prices rise as traders watch Nigeria strike and worry over Iran

Crude oil prices rose in Asian trading Friday amid worries about tension in major oil producers Nigeria and Iran.

Light, sweet crude for July delivery rose 21 cents to US$64.39 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore. The contract dipped US$1.59 to settle at US$64.18 a barrel Thursday.

Potential conflicts in Nigeria - Africa's biggest oil producer and a top supplier of crude to the United States - and Iran could affect global supply and are buoying prices after the sharp drop-off Thursday, analysts said.

Nigeria's powerful oil unions began a strike Thursday at the country's state-owned oil company and threatened to target exports in hopes of reversing the sale of government refineries. The state oil company holds the majority stake in joint ventures with international oil companies that account for more than 90 percent of the country's oil exports.

Iran, meanwhile, has expanded its uranium enrichment program, and the U.S. Navy is holding unannounced exercises off Iran's coast.

Traders and analysts fear any conflict between the U.S. and Iran could result in the closure of the Strait of Hormuz, through which tankers ship carry about 17 million barrels of crude oil a day, according to the U.S. Energy Information Administration.

Still, growing crude stocks in the U.S. have been depressing prices, as traders figure that already abundant crude inventories are likely to swell even more if refineries keep paring back operations for maintenance.

"The refinery problems in the U.S. has meant that there has been a buildup of crude even though there has been very strong demand for gasoline," said Andrew Harrington, an analyst with ANZ Global Natural Resources in Sydney. "So that's putting pressure on crude prices."

But issues surrounding Nigeria, Africa's biggest oil producer and a top supplier of crude to the United States, and Iran have taken front seat for now, Harrington said.

New refinery outages were reported at Valero Energy Corp.'s McKee refinery in Sunray, Texas, and ConocoPhillips' Alliance oil refinery in Belle Chasse, Louisiana, after a U.S. government report showed Wednesday that U.S. crude oil supplies rose 2 million barrels last week when analysts had been expecting a drop of 200,000 barrels.

Another U.S. government report predicting a busy hurricane season is unlikely to have substantial impact on oil prices for now, Harrington said.

"They're predicting another bad one again this year but I think the market has taken it with a bit of stride," he said.

The U.S. National Oceanic and Atmospheric Administration said Tuesday there was a 75 percent likelihood of above-normal hurricane activity during the upcoming Atlantic hurricane season.

In other Nymex trading, heating oil futures fell a tad to US$1.9285 a gallon (3.8 liters) while natural gas prices gained 0.9 cent to US$7.690 per 1,000 cubic feet.