KEY POINTS:
SINGAPORE - Oil prices fell to below US$71 a barrel yesterday as Nigerian unions ended a strike that had threatened to disrupt oil exports.
Benchmark London Brent crude for August fell US59c to US$70.59 a barrel. The contract touched a 10-month high of US$72.25 a barrel early last week as dealers fretted over the potential impact of the general strike.
US light, sweet crude fell US45c to US$68.69 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.
At the weekend, unions in Africa's top oil producer called off their strike after the Government agreed to freeze fuel prices for a year.
The general strike had halted most economic activity but did not affect oil exports, despite earlier threats from the union that they would remove key oil sector personnel.
Western companies replaced key staff with management to keep oil flowing.
However, concerns about the ongoing militant violence that has already shut a quarter of Nigeria's output are likely to persist, supporting prices, analysts say. Four foreign hostages were released unharmed on Saturday.
"There's still a fair bit of production offline. There are some good signs they might sort out these issues, but that's not near-term, we're talking months," said Tobin Gorey, commodities strategist at the Commonwealth Bank of Australia.
The state of US fuel supplies in the midst of the peak demand summer driving season should also keep prices supported.
Inventories of petrol and heating fuel are sharply below seasonal norms, and refiners have thus far been unable to crank up output to refill them.
- REUTERS
