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LONDON - Oil rose towards US$60 a barrel on Friday, drawing strength from a disruption to supply in Nigeria and as a fall in the US dollar boosted other commodities.
The price of oil had dropped nearly US$1 on Wednesday after a US government report showed crude stocks rose a more-than-expected 5.1 million barrels last week, adding to ample supplies.
"It's been pretty weak recently so maybe a rally is not unexpected," said Christopher Bellew, an oil futures broker at Bache Financial in London.
US crude rose 66 cents to US$59.90 a barrel. London Brent gained 74 cents to US$60.09 by 1815 GMT, when the market closed early due to the US Thanksgiving holiday.
Supporting the market, Italian oil company Eni declared a force majeure on exports from the Okono terminal in Nigeria after it was attacked, ship agent Gulf Agency Company said late on Thursday.
Prices were vulnerable to wider fluctuations as the New York Mercantile Exchange was shut for the two-day Thanksgiving holiday but electronic trade continued.
"Because of the holiday it's light volume and that sets the stage for volatility," said Mike Wittner, oil analyst at investment bank Calyon in London.
DOLLAR FALL
The fall in the US dollar boosted the price of precious metals such as gold, but some analysts were sceptical oil was moving in reaction to the US currency.
"Historically, oil is much less strongly correlated to currency movements than other commodities," said Kevin Norrish, oil analyst at Barclays Capital in London.
At the same time, a weaker dollar could encourage Opec to seek a higher oil price because its income from dollar-denominated oil sales is eroded.
The oil minister for Opec's smallest producer, Qatar, on Friday played down the fall in the dollar.
"The currency is always volatile and we have to live with it," Abdullah al-Attiyah told reporters in New Delhi.
"Opec's decisions are not related to the strengthening or weakening dollar, but are driven by demand and supply."
A slide in the dollar in 2003, when oil was half today's price at around US$30, prompted top world exporter Saudi Arabia to say it was seeking to defend higher prices than previously.
Oil's descent from a record of US$78.40 hit in July prompted the Organisation of the Petroleum Exporting Countries in October to cut oil output by 1.2 million barrels per day from Nov. 1.
On Thursday, the Qatari minister had dulled down comments he made last week on the prospect of a further cut in Opec output at a meeting next month.
"It's too early now to jump to the front seat and say what we will do, what is the quantity if we want to cut," he told reporters in Seoul.
Prices over the past few weeks have dipped below US$55 before rebounding to around US$60 despite bulging US inventories and warm winter in the United States suppressing demand.
- REUTERS
