Oil rallies on Nigeria unrest, ignores Saudi pledge

NEW YORK (AFP) - Oil prices rallied Monday on fresh unrest in Nigeria and after Saudi Arabia's pledge to hike output over the weekend failed to allay concerns about tight global supply, analysts said.
New York's main oil futures contract, light sweet crude for August delivery, rose 1.38 dollars to close at 136.74 dollars per barrel.
In London, Brent North Sea crude for August jumped climbed 1.11 dollars to settle at 135.97 dollars.
Most experts agreed the only concrete result of Saudi Arabia's unusual summit Sunday in Jeddah was the OPEC kingpin's widely expected announcement that it was increasing daily production by more than 200,000 barrels to 9.7 million -- and that it could significantly raise output further if necessary.
In the wake of the summit, called in response to the doubling of oil prices to almost 140 dollars a barrel in the past year, market bulls appeared unappeased.
"The Saudis bring more oil to the table at the weekend oil summit as one might expect but it was the promise of plans for the future that was a bit more impressive. Yet will promises be enough to soothe this wild bull market?" said Phil Flynn at Alaron Trading.
John Kilduff, an analyst at MF Global, said that "unfortunately, no consensus emerged between producers and consumers on the cause of high prices. The familiar divide remains: the developed industrial powers keep calling for more supply, while producers blame over-regulation and unchecked speculation."
"The Saudis tried to dazzle the market with its oil and the promise of more oil now and in the future and it might have worked if it were not for the ongoing issues in Nigeria," he added.
Oil prices have been underpinned by recent attacks against foreign oil installations in Nigeria, Africa's largest oil producer. The Nigerian navy has sent two frigates on patrol near a Shell offshore facility in the Bonga oilfield attacked by rebels last week, a military source said Monday.
Armed members of the Movement for the Emancipation of the Niger Delta (MEND). the most high-profile armed group in the oil-rich delta region, attacked the facility Thursday.
On Sunday MEND declared a unilateral ceasefire to begin at midnight Tuesday and lasting until "further notice."
The announcement marked an about-face from an earlier MEND message -- entitled "Declaration of War" -- in which the group warned foreign oil workers to leave the delta while it settled scores with the federal government.
Militants destroyed a major pipeline operated by US oil firm Chevron late Thursday.
"The oil market is more worried about Nigeria and the strength of the US dollar," Kilduff said. The declining dollar has encouraged investment in dollar-denominated oil as a hedge against inflation.
The White House on Monday welcomed Saudi Arabia's output pledge but expressed skepticism the move would have much impact on sky-high US gasoline prices.
"We certainly think that it's welcome that Saudi Arabia will further increase their production," spokeswoman Dana Perino told reporters.
"But we also believe that the fundamental issue of supply and demand continues to rule on this predicament that we are in in our country," said Perino. "We will have to see."
One week ago, crude oil futures hit record highs: 139.89 dollars per barrel in New York and 139.32 in London.