| GEO Business|
| Oil leaps on Nigerian tensions, China demand|
| Updated at: 0430 PST, Tuesday, June 30, 2009|
NEW YORK: Oil prices jumped Monday on tensions in crude producing Nigeria and China's reported plans to rapidly increase its strategic crude oil reserves.
New York's main futures contract, light sweet crude for August, lifted 2.33 dollars from its closing price on Friday to end at 71.49 dollars.
London's Brent North Sea crude for delivery in August gained 2.07 dollars to 70.99 dollars a barrel.
"Reports of another Nigeria attack seems to give the market a boost, as well as a report that China is going to add to its strategic petroleum reserves," said Phil Flynn of Alaron Trading.
Nigerian rebels on Monday announced their latest raid against a Shell oil facility and said they had killed at least 20 soldiers in a gun battle, a claim denied by the security forces.
While a Shell spokesman confirmed the raid and said it had caused a loss of production, Nigeria's combined police and army joint task force (JTF) denied there had been any clash with the rebels.
The Movement for the Emancipation of the Niger Delta (MEND) militants said the Shell Forcados off-shore platform in Delta state was burning "after a massive explosion" following their 2:30 am (0330 GMT) raid.
The MEND statement also said they had sunk a gunboat with between 20 and 23 soldiers on board.
Reports over the weekend that China planned to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years also boosted prices, Flynn said.
"If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support," he said.
But the market for oil and other commodities will continue to be haunted by the global economic downturn, analysts said.
"The natural resource rally, underway since the beginning of the year, seems to be losing momentum," said Mike Fitzpatrick of MF Global.