Oil prices above $125 on Nigeria attacks

Oil prices rose above $125 a barrel Tuesday on supply concerns sparked by the sabotage of two oil pipelines by militants in Nigeria.

Light, sweet crude for September delivery added 33 cents to $125.06 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract rose $1.47 to settle at $124.73 a barrel on Monday.

In London, September Brent crude gained 34 cents to $126.18 a barrel on the ICE Futures exchange.

Monday's attack in Nigeria targeted two pipelines believed to be owned by a unit of Royal Dutch Shell PLC and was the latest in a two-year campaign of attacks on the country's oil industry. Shell said a pipeline had been damaged in attacks and that some crude production had been shut down to prevent the oil from spilling into the environment. It gave no details.

"The militant attacks on Shell's pipelines are certainly supportive of oil pricing," said Victor Shum, an energy analyst with consulting firm Purvin & Gertz in Singapore. "Shell has not divulged the extent of the disruption so it's unclear how serious the pipeline attack is and so the market is really only reacting modestly."

"These attacks have of course happened in the past and caused temporary disruptions and so that's what the market expects - it's been factored in," Shum said.

The Movement for the Emancipation of the Niger Delta says it is acting to force the Nigerian federal government to send more oil-industry funds to the southern region, which produces all of Nigeria's crude oil but remains impoverished after decades of corrupt and wasteful governance.

Shum said the militant attacks in Nigeria are keeping oil prices from slipping further on concerns that high fuel prices have hurt demand in the U.S. - the world's largest energy consumer - amid increasing uncertainty over the global economy.

"The real impact of these reported militant attacks in Nigeria ... simply prevent oil pricing from being weighed down too much over slackening oil demand in the U.S.," he said. "Pricing in the near term looks quite stable around the $125 level."

Crude futures have sharply fallen over the past two weeks. The price of oil has dropped in seven of the last 10 sessions, and is down about 15 percent from its peak above $147 a barrel earlier this month. Prices remain about 65 percent higher than at this time last year.

In other Nymex trading, heating oil futures rose 1.51 cents to $3.5771 a gallon (3.8 liters) while gasoline prices added 1.65 cents to $3.0865 a gallon. Natural gas futures added 6.3 cents to $9.226 per 1,000 cubic feet.