Oil prices up on Nigerian attacks

Supply fears could push prices up further

Oil prices rose above $59 a barrel after the US warned of further attacks in Nigeria on oil facilities.

US crude oil settled at $59.39 in New York, marking a $1.4 rise, after the US consulate said militant attacks could affect expatriate workers in Nigeria.

The rise was also caused by disruptions at two big North American refineries, temporarily reducing capacity.

Some analysts say longer term the predictions of warmer US weather will likely weaken prices.

Christopher Bellew, a broker at Bache Financial, said recent strengths "may be related to Nigeria", but prices could weaken given weather forecasters' predictions.

When oil reached its peak of some $78 last July, geopolitical factors - including unrest in Nigeria - was seen as the main cause, as concerns grew over whether supplies would be threatened.

Nigerian output remains 20% lower after a range of militant attacks a year ago on western oil refineries.

A fire at the 118,000 barrel per day (bpd) Imperial Oil refinery in Nanticoke, Ontario, and a bomb scare at BP's Texas refinery, the third largest in the US, with a crude processing capacity of 460,000 bpd, halted maintenance.

On the other hand, traders are looking to forecasts for above-normal temperatures are in the North East, which uses 80% of US heating oil, pushes oil prices lower.

"The market is still very much driven by short-term factors like the US winter," said Tetsu Emori, chief commodities strategist at Tokyo's Mitsui Bussan Futures.

"It's very short sighted at the moment as the winter won't last for more than the next few weeks."

Figures from the Energy Information Administration (EIA) on Wednesday showed that distillate fuel inventories - which include heating stocks and diesel - fell less than expected last week.

Stocks dropped by 3 million barrels - well below analyst forecasts of more than 4 million barrels.