Oil rose on Monday as a string of US refining outages again sparked concerns of a supply shortfall in the midst of the top consumer's peak driving season.
Prices had fallen more than a dollar in earlier activity as Nigerian oil export fears eased after a production-threatening strike ended and Royal Dutch Shell said it was preparing to restart shipments from a shuttered field.
London Brent crude, the current benchmark for global oil prices, settled 18 cents higher at $71.36 a barrel, after trading down to $69.80 earlier. US crude rose 4 cents to $69.18 a barrel.
Support came from news of maintenance at Total's Port Arthur, Texas, refinery and problems at Exxon Mobil's plant in Baytown, Texas, adding to concerns that lagging US refinery output cannot keep up with demand. The outages helped retrace losses earlier in the trading session after Royal Dutch Shell said it was preparing to resume exports from a Nigerian oilfield abandoned over a year ago because of militant attacks.
The news came two days after Nigerian unions ended a strike that had threatened to halt shipments from Africa's biggest oil producer. It could mark an easing of tension in the oil-rich delta where violence has shut a quarter of Nigeria's output.
Brent had touched a 10-month high of $72.25 early last week on concern the Nigerian strike might disrupt oil exports. Nigeria's biggest foreign operator Royal Dutch Shell said its Forcados oil export terminal may resume operations in July. A restart would add to supply of Nigerian crude, prized by refiners as it is easy to process into fuels.
"This is good news and it has taken some of the concern away from the market," said Chip Hodge, energy portfolio manager with John Hancock Financial Services in Boston.
"There is not a lot of excess production capacity and the potential loss of Nigerian supplies had put upward pressure on prices, especially given the high quality of Nigerian crude."
Below-normal stocks of gasoline and heating oil in top consumer the United States continued to underpin the market, however. US crude stocks are at a nine-year high but refiners have been struggling to churn out refined oil products.
"(We) believe that the continued stress on the US refining system from the adjustment to more stringent product specifications could lead to further refinery outages, posing a downward risk to US refinery runs," said Goldman Sachs. Signs Opec output is creeping higher to take advantage of high prices also helped tip the market lower early.
The 10 Opec members subject to oil production limits are expected to pump 26.8 million barrels per day in June, up from 26.7 million bpd the previous month, said Conrad Gerber, head of Petrologistics, which tracks tanker shipments.
SINGAPORE: Oil prices fell by more than half a percent to below $71 a barrel on Monday as Nigerian unions ended a strike that had threatened to disrupt oil exports.
Benchmark London Brent crude for August fell 47 cents to $70.71 a barrel. The contract touched a 10-month high of $72.25 a barrel early last week as dealers fretted over the potential impact of the indefinite general strike.
US light, sweet crude for August delivery fell 58 cents or 0.84 percent to $68.60 a barrel, unwinding half of last week's gains that were also fuelled by concerns that US refiners are struggling to meet fuel demand in the world's top consumer.
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