Oil prices rose above $73 a barrel today, driven by news of attacks on an oil pipeline in Nigeria and persistently cold weather in the U.S. northeast.
Prices were kept in check, however, by stalling stock markets in Europe and Asia and the continued strength of the U.S. dollar, which made crude more expensive for investors holding other currencies.
By early afternoon in Europe, benchmark crude for March delivery was up 43 cents at $73.32 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 75 cents on Friday to settle at $72.89.
Crude prices have fallen more than 11 percent since the start of the year on signs fundamental demand for energy remains weak.
Americans are burning less gasoline than they did a year ago, according to a report last week from the Energy Information Administration. Hopes that China would prop up global demand for crude have dimmed as Beijing takes steps to prevent its economy from growing too rapidly.
All of this means consumers could enjoy cheaper gasoline and lower heating bills, though it usually takes an extended turn in energy prices for the discount to trickle down to the retail level.
Large stockpiles of oil in the United States and elsewhere were also keeping prices from rising too high, analysts said.
“The global picture of surplus spare capacity … is however unchanged and will continue to act as a cap to any strong rally,” said Olivier Jakob of Petromatrix in Switzerland.
Adding to the glut was the lack of discipline among members of the Organization of Petroleum Exporting Countries, who continued exceeding negotiated output levels.
“With OPEC compliance slipping — just 55 percent of agreed cuts in January — it may be a while before the supply overhang is absorbed,” said a report from KBC Energy Economics in Britain.
Prices were also supported by attacks on oil installations in Nigeria. Although the Movement for the Emancipation of the Niger Delta, the main militant group, said Saturday it was ending an October cease-fire agreement with the government, it denied involvement in the rupture of an important Royal Dutch Shell PLC pipeline.
The attacks were a “noticeable setback” for Nigeria’s oil industry, said JBC Energy in Vienna.
“If these attacks continue, the recent upswing in the country’s crude production from 1.7 million barrels a day last July to 2 million barrels a day in January might turn out to have only been a short period of relief for the country’s plagued upstream industry,” JBC Energy said.
The militants have been seeking to force the government to give the region a larger share of Nigeria’s oil revenues.
In other Nymex trading in March contracts, heating oil rose 1.12 cents to $1.9242 a gallon and gasoline fell 0.18 cent to $1.9116 a gallon. Natural gas rose 15 cents to $5.281 per 1,000 cubic feet.
In London, Brent crude rose 48 cents to $71.49 on the ICE futures exchange.