SINGAPORE - Oil prices rose Monday, supported by weekend news of an attack on a Nigerian oil installation, but with gains limited by the strengthening of the U.S. dollar.
Royal Dutch Shell PLC spokesman Precious Okolobo said Saturday that attackers hit a flow station belonging to Shell's joint venture in southern Nigeria and that some oil production had been shut down. He gave no further details. Flow stations are intersections for pipelines carrying oil from wells to export terminals.
"The geopolitical news (out of Nigeria) is supportive of oil pricing and causes investors to come back into oil," said Victor Shum, an analyst with Purvin & Gertz in Singapore. However, "the strengthening dollar has capped further gains in oil," he said.
Light, sweet crude for June delivery rose 93 cents to $117.25 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract rose $3.80 to settle at $116.32 a barrel on Friday.
Crude futures soared Friday after Turkish airstrikes on Kurdish rebel bases in Iraq injected some supply concerns into the market.
Also supporting oil prices were concerns about Iran after Supreme Leader Ayatollah Ali Khamenei said Sunday that his country will not bend to international pressure and give up its nuclear program. Iran is the second largest producer in the Organization of Petroleum Exporting Countries.
When conflict breaks out or political tensions rise in the Middle East, investors often buy oil on concerns that supplies will be disrupted.
"The market is supported by strong commodity index fund buying that happened on Friday, driven primarily by a belief that there would be supply issues in the long term," Shum said.
An employment report from the U.S. Labor Department also gave investors reason to be optimistic about the U.S. economy. The U.S. is the world's largest consumer of oil and any drop in demand there can have a global impact on prices.
Oil prices dropped to nearly $110 a barrel on Thursday, helped by the rising U.S. dollar, which now stands above 105 against the yen and near 1.55 against the euro. Both levels are significantly above record lows the dollar hit last month and in March against the currencies.
A rising dollar undercuts the appeal of commodities such as oil as a hedge against inflation, and makes oil more expensive to investors overseas.
In other Nymex trading, heating oil futures added 1.24 cents to $3.2311 a gallon while gasoline prices fell 0.64 cent to $2.96 a gallon. Natural gas futures rose 7.3 cents to $10.85 per 1,000 cubic feet.