Oil eases below $72; Nigeria strike eyed

Oil prices eased on Tuesday, pulling back from the 10-month high posted the previous session on concerns that a strike call in Nigeria could further cut crude output in the world's eighth-biggest oil exporter. Benchmark London Brent crude settled down 34 cents at $71.84 a barrel. During Monday's session, it hit a peak of $72.25, its highest since August 28.
US crude settled up 1 cent to $69.10, after rising $1.09 on Monday, the fourth session in a rally that has lifted prices by nearly $4. A general strike in Nigeria will go ahead as planned on Wednesday, unions leaders said, after rejecting a government offer to partially reverse a fuel price hike in the Opec nation.
Unions met on Tuesday to consider the government offer, but issued a statement saying only a full reversal of the 10 naira (8 cent) rise in fuel prices could avert the action, which may cut oil supply from the world's eighth largest exporter.
"At the moment, it's all about what's happening in Nigeria. The potential for a real strike there is helping prices up," said Andrew Harrington, an analyst from ANZ Bank in Australia. The planned strike posed a challenge to newly inaugurated President Umaru Yar'Adua and comes after more violence flared in the oil-producing Niger Delta over the weekend.
Armed militants stormed two Western oil facilities in the Niger Delta in recent days, disrupting production. Militants have forced the shutdown of nearly a quarter of the nation's output of around 3 million barrels per day.
Further support came from a strike threat from Brazil's state oil company Petrobras and concerns over fuel supplies in the United States, the world's top consumer. "US gasoline continues to underpin crude prices as refiners struggle to keep up with strong demand across the driving season," Citigroup said in a research note.
Analysts expect US government data on oil inventories on Wednesday to show gasoline and distillate stocks rose last week as refinery operations recovered from unseasonably low levels, according to a preliminary poll. Crude stocks were seen marginally higher.
The head of the International Energy Agency, representing the interests of 26 consumer nations, urged the Organisation of Petroleum Exporting Countries to raise production to increase oil supplies. "They need to increase output as soon as possible," Claude Mandil told Reuters. Violence in the Gaza Strip also rattled traders, although analysts said there was little indication it would spill over to neighbouring oil-producing countries.
US crude hit a record high of $78.40 nearly a year ago on fears that fighting between Israel and Lebanese Hezbollah guerrillas could spread to Middle East oil producers. Iran, a member of Opec, said it wants a price that preserves the producer group's market share and oil income.
Iran's Opec governor said in remarks published on Tuesday that a price below $55 a barrel would hurt oil investment and above $75 would change consumers' energy policy.