Oil prices rise after surprise decline in US crude stocks

SINGAPORE (AFP) - Oil prices rose in Asian trade Friday after a surprise decline in US crude stocks and production disruptions continued in key crude producer Nigeria, dealers said.

At 10:40 am (0240 GMT), New York's main oil futures contract, light sweet crude for delivery in July, was up 18 cents at 64.19 dollars per barrel from 64.01 dollars in late US trades.

Brent North Sea crude for July was up 21 cents at 68.25 dollars.

Prices had risen Thursday after the US Department of Energy (DoE) in its weekly report said gasoline (petrol) stockpiles rose by a less-than-expected 1.3 million barrels in the week ended May 25, against market expectations for an increase of 1.5 million.

US crude reserves fell 2.0 million barrels to 342.2 million barrels over the same period, against analysts' forecasts for a build of 1.0 million barrels.

"The unexpected aspect of the report is that crude inventories actually came down ... (and) crude oil (prices) therefore rose," said Victor Shum, an analyst with Purvin and Gertz energy consultancy in Singapore.

"That (upward) trend is continuing. However, the crude stock draw and build in products, in particular gasoline are at where ... (they should be) at this time of the year," Shum said.

Gasoline reserves are currently under pressure from the peak-demand driving season as many Americans take to the highways for their summer holidays.

Traders are also watching the Atlantic hurricane season which begins Friday after US weather forecasts said it would be an "active" one.

"Weather forecasts in the US are saying it is going to be a very active season. Time will tell if any of the hurricanes will affect the oil infrastructure in the US gulf coast," Shum said.

The upward price movement was also supported by continuing unrest in Nigeria.

Kidnappings have become commonplace in the Niger Delta in the past 18 months with around 180 foreigners, most of them linked to the oil industry, taken hostage since the beginning of 2006. Most of them have been released unharmed.

Recent unrest in Nigeria has reduced oil output in Africa's biggest producer by about 25 percent.