US crude oil futures retreated below $66 this evening as warm US weather dampened heating fuel demand and led analysts to predict another increase in distillate inventories.
February crude traded 56 cents lower at $65.75 a barrel on the New York Mercantile Exchange, after hitting an overnight high of $66.93 which was its loftiest since September 30, 2005. In London, March Brent crude traded 71 cents lower at $64.19 a barrel.
Crude prices had risen sharply earlier today as unrest in Nigeria and Iran's standoff with the West over its nuclear programme prompted fears of supply dislocations.
The weather remained unseasonably warm in the US Northeast, the world's largest consumer of heating oil. Temperatures are expected to average above to much above normal until Saturday.
Expected news of hefty US stockpiles tomorrow and the warm weather mitigated news that Nigerian rebels threatened to widen their attacks to all foreign oil firms operating in the country.
After forcing Royal Dutch Shell to cut production in Nigeria by 226,000 bpd, militants set their sights on Total, Agip and Chevron operations in a drive to halt oil flows from the world's eighth biggest crude exporter. In a statement today, the rebel Movement for the Emancipation of the Niger Delta said it had widened its attacks to Agip and Total facilities and would also target Chevron.
Meanwhile, Iran's dispute with the West over its nuclear programme has traders worried about oil supplies from OPEC's second biggest producer. Iran's Supreme Leader Ayatollah Ali Khamenei said today that the world could not deflect Iran from its 'scientific developments'.
Blanket sanctions such as an oil embargo against Iran are thought highly unlikely, but Tehran has not ruled out using oil for leverage.
* AA Ireland has said petrol and diesel prices are expected to rise by two or three cent per litre as a result of the latest recent rises.
