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SINGAPORE - Oil prices fell yesterday after a Nigerian oil union strike that had threatened to further curtail shipments was suspended, although the start of the US summer driving season limited losses.
Union leaders said at the weekend that the national oil company had suspended the strike, which had been going for two days, 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 US40c to US$70.29 a barrel, after resisting most of the US market's late-Friday rally on short covering ahead of the long holiday weekend. US crude dropped US39c to US$64.81 a barrel after surging more than US$1 on Friday.
Although electronic trading of both US and European oil contracts was expected to run as normal overnight, dealers anticipated thin liquidity given the UK bank holiday and the US 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 per cent 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.
Record high pump prices of US$3.23 a gallon are not expected to have deterred American holidaymakers from their summer road trips over the Memorial Day weekend, according to motoring group AAA, which expects a 1.8 per cent rise in long-distance travellers.
- REUTERS
