Oil prices were mixed Wednesday, as expectations that U.S. inventory data would show an increase of crude and gasoline supplies were tempered by worries about disruptions in Nigeria.
Prices plunged more than $2 a barrel a day earlier, as developments with major producers Iran and Nigeria eased some geopolitical concerns.
Light, sweet crude for July delivery added 13 cents to $63.28 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe, while Brent crude for July fell 56 cents to $67.78 a barrel on the ICE Futures exchange in London.
Markets were unsettled on word that 150,000 barrels of daily output had been cut from Royal Dutch Shell's production in Nigeria after protests by local youths, but Shell said later that it had begun restoring oil production.
A day earlier, though, the Nymex July crude contract dropped $2.05 to settle at $63.15 a barrel on hopes that the inauguration of a new president in OPEC member Nigeria would contribute to a stable supply from the Niger Delta region.
“The $2 drop yesterday is not necessarily the beginning of a downward trend, so some market participants view the moment as a buying opportunity,” said Victor Shum, energy analyst with Purvin & Gertz in Singapore.
Umaru Yar'Adua, 56, was sworn in Tuesday as the new president, replacing Olusegun Obasanjo, who stepped down after eight years.
In his inaugural address, Yar'Adua called for an immediate end to hostilities in the southern oil region. The main militant group, the Movement for the Emancipation of the Niger Delta, responsible for shutting in nearly 20 percent of Nigeria's oil production over the past year, said they are considering the request.
A rare, formal meeting over the weekend between U.S. and Iranian officials also soothed traders' concerns about a potential conflict between the two countries.
“Those new items were interpreted by the oil market as calming news, as far as geopolitics is concerned. And geopolitical factors have been key drivers for the oil market,” Shum said.
Shum said, however, that the energy market continued to be driven by a number of factors, such as the U.S. gasoline supply situation, which despite recent increases remains well below the average for this time of year.
The U.S. Energy Department's weekly report to be released Thursday is forecast to show domestic gasoline stocks rose by 1 million barrels in the week ended May 25, according to a Dow Jones Newswires poll of analysts.
Crude oil inventories were expected to climb by about 300,000 barrels, while distillates stocks were predicted to rise by about 500,000 barrels.
“If these forecasts are accurate, this could result in prices declining further,” Vienna's PVM Oil Associates said.
Heating oil futures gained nearly a cent to $1.8780 a gallon (3.8 liters), while natural gas prices rose over 12 cents to $7.855 per 1,000 cubic feet.
