futures up 37 - oil +25%, page-10

not quite 25% but

May 18 (Bloomberg) -- Crude oil rose on speculation that prices fell too far at the end of last week and may rebound as optimism about an economic recovery grows.

Prices rose today after dropping 3.9 percent on May 15, the biggest decline in almost a month, when a report showed U.S. industrial production fell for a sixth month. Crude also climbed after Nigerian militants attacked pipelines from Chevron Corp.’s Escravos terminal to domestic refineries and power stations.

“The downside potential to oil prices is limited by the fear, or hope, that the economy will go up again and oil consumption will go up again,” said Gerrit Zambo, an oil trader at BayernLB in Munich. “It is too early to say we have a downtrend.”

Crude oil for June delivery rose as much as 76 cents, or 1.4 percent, to $57.10 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $57 at 10:16 a.m. London time.

The June Nymex oil contract expires tomorrow. The more actively traded July contract was at $57.63 a barrel, up 63 cents, at 10:16 a.m. London time.

Fighting in Nigeria has escalated between government troops and the militant group since May 13 when Nigeria’s Movement for the Emancipation of the Niger Delta said it responded to an army offensive by attacking military positions and hijacking a tanker.

MEND claimed responsibility yesterday for rupturing two pipelines supplying oil and natural gas from a Chevron Corp. facility to domestic refineries and power stations. The rebel group has threatened to blockade waterways in the southern region used for oil and gas exports.

Pipeline Risk

“Apart from the pipeline risk, we would not be surprised to hear that majors are currently evacuating personnel from oil installations,” said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix Gmbh. “We are maintaining a Nigerian risk premium for the week.”

Brent crude for July settlement rose as much as 82 cents, or 1.5 percent, to $56.80 a barrel on London’s ICE Futures Europe exchange. The contract was at $56.71 a barrel at 10:17 a.m. London time.

Hedge-fund managers and other large speculators switched from a net-short position to a net-long position in New York crude-oil futures in the week ended May 12, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 3,066 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Last week, traders were net-short 11,285 contracts.