Oil prices retreated in Asian trading Monday after a Nigerian militant group announced a one-month cease-fire and a U.S. gasoline pipeline was restarted. Both items of news eased supply concerns.
Light, sweet crude for July delivery fell 46 cents to US$64.62 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore.
The Movement for the Emancipation of the Niger Delta announced a one-month cease-fire Saturday. The group's attacks in Nigeria's oil-producing areas have pushed global crude oil prices higher, and the move offers newly inaugurated President Umaru Yar'Adua an opening to solve the crisis that has roiled Africa's oil giant, a leading exporter of crude oil to the United States.
Separately, gunmen kidnapped six Russians in the country's southern oil-producing region Sunday.
"Maybe there are some hopeful signs for some temporary restraints on further militant attacks and sabotage," said Victor Shum, energy analyst with Purvin & Gertz in Singapore.
"But kidnappings also happened on Sunday, so the risks in Nigeria continue," he said.
Crude oil futures rose US$1.07 to settle at US$65.08 a barrel Friday on continued concerns that U.S. refineries are not producing enough gasoline to meet peak U.S. summer driving demand.
The restart Sunday of a pipeline operated by Colonial Pipeline Co. may have helped ease some of those supply worries.
Atlanta-based Colonial Pipeline had said Friday that gasoline pipeline operations between Atlanta and Greensboro, N.C., would be delayed, partly contributing to Friday's big rise.
"Now that the Colonial Pipeline has restarted to supply products from the U.S. Gulf Coast to the importing U.S. East Coast, the crude oil futures market is dipping a bit," Shum said.
Colonial Pipeline operates the world's largest pipeline for refined petroleum products. It spans some 5,350 miles (8,609 kilometers) between Texas and the New York Harbor.
A U.S. government report last week showed gasoline supplies grew by 1.3 million barrels in the week ended May 25, but investors remain concerned that inventories are not growing fast enough to meet demand. U.S. gasoline supplies are still more than 10 million barrels lower than at this time last year.
In other Nymex trading, heating oil futures fell 0.28 cent to US$1.92 a gallon (3.8 liters) and natural gas prices gained 2 cents to US$7.898 per 1,000 cubic feet.