Oil Cracks $73 as Nigeria Violence Fans Supply Worries

Crude oil futures jumped above $73 a barrel Thursday on intensified supply worries, after police said gunmen in Nigeria kidnapped at least two foreign oil workers from a bus in a second day of attacks targeting such workers.

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The workers were riding on a bus to work in Port Harcourt when they were abducted, Police Commissioner Samuel Adetuyi told The Associated Press. He gave no further details. In Italy, the Foreign Ministry said an Italian and possibly two more people were kidnapped Thursday in the area in what appeared to be the same incident.

It was the second attack in about 24 hours on foreigners Port Harcourt, where many oil-services companies keep their main Nigerian operations. An unidentified gunman riding a motorcycle Wednesday shot and killed an American riding in a car to work at the offices of the U.S. drilling-equipment maker Baker Hughes Inc.

A new militant movement whose attacks on oil installations have cut more than 20 percent of Nigeria's 2.5 million daily barrel production said Tuesday it would target oil workers with fresh attacks. But a spokesman for the Movement for the Emancipation of the Niger Delta said in an e-mail to The Associated Press Thursday that the group wasn't responsible for either the slaying or the kidnappings.

Still, the news sent light, sweet crude for June delivery on the New York Mercantile Exchange as high as $73.90 a barrel Thursday, before it eased back to settle at $73.32, still up $1.19 from its settlement a day earlier.

"It just seems like there's an increased risk with the Nigerian rebels. Years ago the market used to laugh them off ... but it seems like the situation's getting a lot worse before it gets better," said Phil Flynn, analyst at Alaron Trading Corp. He added, "At some point, the oil companies aren't going to go in there until it's secure."

Brent crude rose 99 cents to settle at $73.43 a barrel on London's ICE Futures exchange.

Gasoline rose more than 5 cents to settle at $2.2196 a gallon, while heating oil gained more than 3 cents to $2.0964 a gallon.

Pump prices for U.S. drivers remain high, at $2.885 per gallon of regular unleaded gasoline on average, according to AAA's daily fuel gauge report Thursday.

Concerns about Iran, a major oil exporter, also continued to support prices. The country's President Mahmoud Ahmadinejad on Wednesday dismissed Western concerns over its nuclear program as "a big lie," even as other voices in the regime appeared to suggest that international cooperation was possible.

The comments came a day after key U.N. Security Council members agreed to present Tehran with a choice of incentives — including energy security and civilian nuclear power — or sanctions in deciding whether to suspend its uranium enrichment program. The move delays a U.S.-backed draft U.N. resolution that could lead to sanctions, or even possible military action, if Iran does not suspend enrichment.

The geopolitical worries overshadowed the weekly petroleum report from the United States on Wednesday, when the U.S. Energy Department said crude-oil inventories rose last week by 300,000 barrels to 347 million barrels, or roughly 5 percent above year-ago levels.

Gasoline inventories climbed by 2.4 million barrels to 205.1 million barrels, or almost 4 percent below last year. It was the second straight week in which gasoline stocks rose.

Traders also focused on a 15,000 barrels-per-day reduction in gasoline output over the next few days due to repairs at a Valero Energy Corp. refinery unit in Texas City, Texas. Any hint of a disruption to refinery operations, with global demand strong and the supply cushion thin, can affect prices.

Futhermore, oil is just one of the many commodities that's been soaring lately — gold, copper, sugar and others have risen to multiyear records, as speculative buying feeds on itself.

"You name it, a commodity is seeing this influx of money coming into it, and prices are being pushed higher," said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York. Crude futures hit an all-time high of $75.35 a barrel last month. "It seems like only a matter of time before we take out the old highs," Bentz added.

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