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Oil Near $50 on Nigeria Unease

LONDON -- Oil prices held above $49 on Friday as a rebel warlord threatening an offensive in Nigeria's oil-producing delta region said the government had violated the terms of a two-day truce, reported Reuters.

U.S. light crude was down 14 cents at $49.50 a barrel, within a dollar of a record high of $50.47 hit earlier in the week. London Brent crude was 15 cents down at $46.23 a barrel.

Militia leader Mujahid Dokubo-Asari said on Friday Nigerian President Olusegun Obasanjo's government had violated a two-day ceasefire and that he had told his men to fire on troops.

Asari threatened to blow up a natural gas plant at Soku if they failed to stop troops.

Prices hit record highs earlier this week on fears that disruption to Nigerian supply could inflict further strain on world supplies already struggling to meet the fastest demand growth in 24 years.

The rebels have told oil companies to shut down unless the government began talks on autonomy and revenue for the impoverished region, home to most of Nigeria's 2.3 million barrels per day output.

Prices eased a little on Wednesday after the U.S. government reported a surprise increase in crude stocks. The impact of that report, however, was blunted by a fall in refined product stocks ahead of winter after refinery operations were disrupted by Hurricane Ivan.

"The normal autumn easing of fundamentals has been frustrated by Hurricane Ivan in the U.S. Gulf Coast," said Washington D.C.-based analysts PFC Energy in a report.

The U.S. government said almost 29 percent of daily output in the Gulf of Mexico remained shut after Hurricane Ivan.

"As winter approaches, the situation is poised to worsen as demand rises seasonally in both the Atlantic and Pacific Basins," PFC Energy said.
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