Crude oil rose above $69 after militants attacked a Royal Dutch Shell Plc pipeline supplying an export terminal in Nigeria, Africa’s largest producer. The Movement for the Emancipation of the Niger Delta, the main militant group in Nigeria’s southern oil region, said it attacked a “major” crude oil pipeline supplying Shell’s Bonny terminal. The militant group has stepped up a sabotage campaign since a military offensive began last month in the Niger River delta, Nigeria’s main oil-producing region. The oil market is “starting to price in the Nigerian disruption,” Olivier Jakob, managing director at Petromatrix GmbH, said by phone today from Zug, Switzerland. “It’s definitely starting to add up.” Crude oil for August delivery rose as much as 82 cents, or 1.2 percent, to $69.49 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $69.41 at 12:50 p.m. London time. Prices are up 56 percent this year. Nigeria may currently be producing as little as 1.3 million to 1.4 million barrels of crude a day, compared with 1.8 million barrels a day in the first quarter, Jakob said. Fighters from the Nigerian group damaged the Bille-Krakrama pipeline overnight, cutting supplies from Shell’s Cawthorne 1, 2 and 3 oil-pumping stations, MEND spokesman Jomo Gbomo said in an e-mail. A Shell spokeswoman confirmed an attack on a manifold on the pipeline and couldn’t say whether production was halted by the incident. ‘Getting Worse’ “It’s getting worse,” Thina Saltvedt, an analyst at Nordea Bank AB in Oslo, said by phone. There are concerns the violence will “cause long-term effects on oil installations.” Nigeria is running out of crude to supply refineries because of the militant violence, forcing the country to close its Warri and Port Harcourt refineries, The Guardian newspaper in Nigeria reported. The Kaduna refinery’s crude stockpiles will be exhausted in the next 15 days, the paper said, citing the state-run Nigerian National Petroleum Corp. Managing Director Mohammed Barkindo. The number of supertankers used to store crude oil at sea has dropped by about a quarter in the past month, according to Morgan Stanley. Some 33 to 35 vessels are in use now, compared with probably 46 in May, Mark MacLean, vice president for hedge- fund sales at Morgan Stanley in London, said yesterday. A supertanker can hold about 2 million barrels of oil. U.S. Inventories U.S. oil inventories fell for a third week by 3.87 million barrels to 353.9 million barrels last week, the lowest since March, the Energy Department said yesterday. U.S. supplies of distillate fuel, a category that includes heating oil and diesel, rose by 2.08 million barrels to 152.1 million, the highest since January 1999. A gain of 850,000 barrels was forecast, according to the median of 15 analysts surveyed. Gasoline inventories rose 3.87 million barrels to 208.9 million last week, the Department of Energy said. Stockpiles were forecast to increase by 1 million barrels, according to a Bloomberg News survey. Refineries operated at the highest rates this year and fuel demand fell 5.5 percent, the biggest drop since January. Refineries operated at 87.1 percent of capacity in the week ended June 19, up 1.2 percentage points from the previous week and the highest since the week ended Dec. 5, the Energy Department report showed. Brent crude for August settlement was up 92 cents to $69.25 a barrel on London’s ICE Futures Europe exchange at 12:50 p.m. London time.

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