Crude oil futures rose on Monday to $120 a barrel after another attack in Nigeria rose concerns on tight supplies from the country while the dollar fell and U.S. economic data showed demand may not be as weak as expected.
The Movement for the Emancipation of the Niger Delta (MEND) confirmed an attack on a 30,000 barrel- per-day flow station owned by Royal Dutch Shell Plc on Saturday around 2:00 a.m.
The attack is part of the MEND's Operation Cyclone aimed to cripple the nation's oil export. The group has bombed five pipelines operated by Shell and the company has reduced its production of light crude by 170,000 barrels a day.
Crude futures rose $3.64 or 3.13 percent to $119.96 a barrel on the New York Mercantile Exchange by 2:52 p.m. Prices rose to its highest record of $120 a barrel in regular trading.
The dollar also affected crude prices. The dollar index which tracks the U.S. currency against other major currencies dropped 0.3 percent to 73.26. Declines on the dollar drive investors to the commodity sector to compensate for inflation.
Supporting prices today, economic data in the world's top consumer of oil showed that the U.S. service sector jumped erasing three straight months of losses. The Institute for Supply Management's index of non-manufacturing business rose to 52 from 49.6 the ISM reported. 50 is the division line between contraction and expansion.
Also easing demand worries the Labor Department reported last Friday 20,000 jobs were lost in April far less than forecasted while in March 81,000 jobs were lost.
Brent crude rose 59 cents or 0.52 percent to $114.77 a barrel on the London ICE Futures Exchange.
On Friday oil prices rose to $116 a barrel after Turkey attacked Kurdish rebels in the North of Iraq near a rich oil field and clashes were renewed affecting futures today.