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Oil dips as Nigerian strike ends

Oil prices edged lower on Monday after a Nigerian oil union strike that had threatened to further curtail shipments was suspended at the weekend.

business Updated: May 29, 2007 04:04 IST

Oil prices edged lower on Monday after a Nigerian oil union strike that had threatened to further curtail shipments was suspended at the weekend, although the start of the U.S. summer driving season limited losses.

Union leaders said on Saturday the national oil company had suspended the strike, which had begun two days earlier, after the government agreed to a pay rise and other benefits, although oil traders will remain anxious over the country's exports.

London Brent crude for July fell 24 cents to $70.45 a barrel by 2305 GMT, after resisting most of the U.S. market's late-Friday rally on short covering ahead of the long holiday weekend. U.S. crude traded down 1 cent to $65.19 a barrel after surging more than $1 on Friday.

Although electronic trading of both U.S. and European oil contracts runs as normal on Monday, dealers anticipated thin liquidity given the UK bank holiday and the U.S. Memorial Day, which marks the start of the summer holiday season.

In Nigeria, the head of senior staff union PENGASSAN Peter Esele said the group had suspended its strike after the government agreed to a 15 percent pay rise and severance benefits relating to the privatisation of the largest oil refinery.

"I'd expect the effect to be marginal," said David Moore, commodities strategist at Commonwealth Bank of Australia.

"Currently there are a number of factors that threaten potential disruptions to oil supplies from Nigeria, the strike is only one of them. The law-and-order type issues...are posing a more long-standing risk to oil supplies."

Output from the world's eighth-largest exporter is already down a quarter after an 18-month campaign of militant attacks against Western oil installations.

On Friday gunmen kidnapped nine foreign oil workers and a Nigerian colleague from a ship off the coast of Nigeria, taking the total number of foreign hostages to 25.

NYMEX gasoline led the complex's gains on Friday with a 2 percent or nearly 5-cent-a-gallon rally, and prices rose another 0.63 cents to $2.4100 a gallon early on Monday, with dealers edgy as stockpiles languish below seasonal norms.

Record high pump prices of $3.23 a gallon are not expected to have deterred holidaymakers from their summer road trips over the Memorial Day weekend, according to motoring group AAA, which expects a 1.8 percent rise in long-distance travelers.

Crude oil speculators boosted their net long positions by more than a fifth over the week ended May 22, U.S. regulatory data showed. Gasoline speculators marginally trimmed their length.