Crude oil trading higher Tuesday, on Nigeria oil supply fears

Oil prices are trading higher on Tuesday as oil supply concerns as militants operating in Nigeria’s key oil producing region ended a ceasefire and Royal Dutch Shell was forced to cut output after a pipeline was sabotaged.

US Light crude oil futures for March delivery was up 27 cents at $74.70 a barrel at early afternoon Bangkok time in electronic trading on the NYMEX, while in London, Brent crude rose 25 cents to $73.36 on the ICE futures exchange.

A spokesman for the Anglo-Dutch group Shell told AFP on Monday that it had “shut in some output as a result of the vandalisation of the Trans Ramos pipeline” at the weekend. Separately on Monday, OPEC’s chief Abdalla Salem El-Badri said that a recovery in oil demand was underway but uncertainties persisted, after the global economic downturn had curbed the world’s appetite for energy.

“Demand recovery is underway but there are still (a) high (number of) uncertainties” about the outlook, the secretary-general of the Organization of Petroleum Exporting Countries said in London. El-Badri added that the “three challenges for producers” were extreme oil price volatility, inflated investment costs and a lack of qualified people to work in the industry.

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