(Releads, updates prices, adds analyst comments, previous PERTH)
By Janet McGurty
LONDON, May 5 (Reuters) - Oil prices slipped from early
highs on Monday in lighter than usual trade, after reaching over
$117 a barrel on fear that Nigerian output cuts and geopolitical
tensions between Iran and the West would curtail supply.
U.S. light crude for June delivery <CLc1> was trading up 80
cents to $117.12 at 1200 GMT, after rising to $117.33.
London Brent crude <LCOc1> also jumped 66 cents to $115.22.
"We are moving with little volume after a strong technical
rally at the end of last week," said Olivier Jakob, managing
director for Petromatrix, who said volumes were lighter than
normal because of a bank holiday in Britain. "Last week's
technical rally shook out a few shorts," he said.
In Nigeria, Royal Dutch Shell <RDSa.L> was forced to shut
more of its production after militants on Saturday attacked a
flowstation in the oil-rich Niger Delta, where insurgents have
stepped up a campaign of violence.
"A few oil delivery lines are affected and some oil has
spilled into the environment," a Shell spokesman said. Recent
violence has already shut 164,000 barrels per day of Shell
production in Nigeria [].
"Supply issues in Nigeria and tensions between Iran and the
West are at play here," Singapore-based Victor Shum, an energy
analyst from Purvin & Gertz, said.
MIDDLE EAST TENSIONS
In the Middle East, Iran's Foreign Ministry said on Monday
it would not consider any incentives offered by world powers
that violated Iran's nuclear rights, ruling out a key demand
that it halt uranium enrichment programme [].
The comments come just three days after major powers said
they would make a new offer to convince the Islamic Republic to
halt its nuclear plans, a process which the West believes Tehran
wants to master so that it can build nuclear weapons.
Renewed clashes between Turkey and Kurdish rebels in
northern Iraq also lent support to oil prices.
The Turkish army said on Saturday it killed more than 150
Kurdish PKK fighters in air strikes in northern Iraq last week,
but the rebel group denied this and security forces in the
region also expressed scepticism.
Shum said a strong U.S. dollar has helped to cap oil's gains
but others see a decoupling between the dollar and oil.
""It's beginning to break down," said Petromatix' Jakob.
U.S. oil rose $3.80 to settle at $116.32 on Friday,
bolstered by a U.S. government report that showed the economy
lost only 20,000 jobs in April, a quarter the number economists
had expected. Surprisingly strong United States factory order
data improved sentiment further.
The gains followed three days of losses amid concerns that
economic weakness in the U.S. would dent world oil demand.
Analysts said traders were now waiting for a survey later in
the session on the U.S. service sector.
Crude oil speculators on the New York Mercantile Exchange
cut net long positions last week, according to data from the
Commodity Futures Trading Commission released on Friday.
Net crude long positions fell to 53,311 in the week to April
29, down from 70,562 in the week to April 22 [].
(additional reporting by Fayen Wong in Perth; editing by James
Jukwey)
