Oil: Prices slip on bearish gas report

Oil prices slipped on Thursday after a government report showing a smaller-than-expected decline in US natural gas supplies last week, countering a disruption in crude exports from Nigeria.

US crude was down 36 cents to $58.20 a barrel by 1:25 p.m. (1825 GMT) on the New York Mercantile Exchange. London Brent crude was down 7 cents to $56.65 on the International Petroleum Exchange.

The losses came after the US Energy Information Administration said in a report issued Thursday that US natural gas inventories fell last week by 162 billion cubic feet, countering expectations of a 169 bcf draw.

Crude prices had been in positive territory earlier in the day, rising as high as $59 a barrel in the United States after Shell declared force majeure, a technical release from honoring contracts, delaying delivery of more than 300,000 barrels per day of some of the world's finest quality oil.

Shell was forced to close a pipeline that pumps 180,000 bpd after unidentified gunmen attacked it on Tuesday. Oil dealers said the shutdown could last around six days.

Market activity should be thin for the rest of the week as many traders were already out for the Christmas holiday.

In a separate report issued Wednesday, the EIA said US distillate inventories, including heating oil, fell by 2.8 million barrels in the week to Dec. 16 due to a 9 per cent surge in demand and a slowdown in refinery activity.

However, the drop in refining boosted crude stockpiles by 1.3 million barrels, against analysts' expectations for a drop of 1 million barrels, leaving inventories more than 12 per cent higher than last year.

The president of the Organisation of Petroleum Exporting Countries, Sheikh Ahmad al-Fahd al-Sabah, on a visit to China, reiterated on Thursday the cartel would have to consider cutting production at its late-January meeting, if prices fall.

- REUTERS