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SINGAPORE, Dec 22 (Reuters): Oil prices climbed towards $59 today, bolstered by a larger-than-expected drop in US heating oil stocks and lost Nigerian output following a dynamite attack on a pipeline.
US February light crude was up 33 cents at $58.89 a barrel, building Wednesday's gain of 47 cents in New York. London Brent crude was 30 cents higher at $57.02, extending a 55-cent rise the previous day.
"The distillate draw in the United States is driving the market higher," said Tony Nunan, a manager at Mitsubishi Corp's risk management business. "The market is not terribly bullish in the short term because crude inventories are still high."
Crude production in OPEC member Nigeria has been cut by 180,000 barrels per day, Royal Dutch Shell said Wednesday, after an attack earlier this week on a pipeline in the southern Niger Delta.
But a senior industry official said that exports remain unaffected and that repairs are expected to be completed within a few days.
Analysts still expect already-high US crude inventories to build further but oil products to be in short supply, particularly due to a global shortage of refining capacity.
US refineries are expected to shut down for heavy maintenance early next year after the government asked oil companies to defer scheduled autumn work to make up for supplies disrupted by an unusually active hurricane season.
The cartel, pumping at about 30 million barrels per day (bpd), its highest in a quarter century, decided at its meeting last week to defer any cuts in output quotas until next year.
Acting OPEC Secretary-General Adnan Shihab-Eldin said he expected the cartel's basket of heavy crude prices to remain in the range of $45-$55 a barrel, which equates to around $52-$60 a barrel for US light sweet crude futures.
"That (price) seems to have been helping to keep the market well supplied and at the same time not hurting the world economy," Shihab-Eldin said.
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