WORLD / America

Oil climbs back above US$72
Updated: 2006-05-01 13:53

Oil edged back above $72 a barrel on Monday, drawing renewed support from Iran's defiant stance in the face of possible U.N. sanctions and a car bombing aimed at the oil industry in Nigeria.

This undated file photo obtained in 2004 from the US Department of Energy (DOE) shows a Unocal oil truck at an oil storage facility. This week the top-three US oil producers, ExxonMobil, Chevron and ConocoPhillips, reported more than 15 billion dollars of profit in the first quarter of 2006, adding fuel to a debate over skyrocketing energy costs. [Reuters]

US light, sweet crude reversed light early losses to trade up 25 cents at $72.13 a barrel by 0417 GMT, pausing after a rebound on Friday that helped limit last week's losses to 4.4 percent. IPE Brent crude was up 8 cents at $72.10.

Trading was thin due to holidays in much of Asia and Europe.

Oil has tumbled from a record peak $75.35 a barrel a week ago as dealers took profits and grew more confident about summer gasoline supplies, partly thanks to U.S. President George W. Bush's call to temporarily ease fuel standards.

But geopolitical jitters provided a solid base, analysts said, preventing prices from retracing much of the nearly $11 gains they have registered this year.

"I think the oil market is in for a period of consolidation for a few days," said Tobin Gorey of the Commonwealth Bank of Australia. "I don't think there's any real interest in getting a sustained short on because it's simply too dangerous."

While oil prices look to be well supported at above $70, the momentum of a rally that had added $15 to prices from March 21 to April 21 had faded, Gorey added.

Iran, which the world's nuclear watchdog said last week had ignored calls to abandon its atomic program, vowed on Sunday to carry on pursuing a nuclear fuel cycle and to strike back if it comes under attack.

U.N. ambassadors from the United States, Britain and France are expected to introduce a Security Council resolution this week to legally oblige Iran to comply with demands to halt enrichment.

Failure to do so could result in limited sanctions, although Russia and China -- the other two veto-wielding council members -- say they do not favor such a move for now.

Iran's Deputy Oil Minister Mohammad Hadi Nejad-Hosseinian told a news conference in Pakistan that curbs on the country's oil industry were unlikely to be any part of U.N. sanctions, but dealers remain anxious over the world's fourth-biggest exporter.

Ongoing violence in Nigeria, where militants have succeeded in cutting production by a quarter, added support.

The Movement for the Emancipation of the Niger Delta, which wants more local control over the southern delta's oil wealth, said it had detonated 30 kg (66 lb) of dynamite in a car bombing close to a refinery in the oil capital of Warri.

There were no casualties, an army spokesman said.

The militants said it was a warning to oil industry workers and investors, singling out the Chinese government, which last week clinched a multi-billion deal for access to oil acreage.

Meanwhile speculative short-term fund managers expanded their net long positions a week ago, boosting New York Mercantile Exchange (NYMEX) non-commercial net crude length to a fresh one-year high of over 74,000 lots in a bet that prices would continue to rally, regulatory data showed on Friday.