Oil prices moved lower on Monday after unions in Nigeria called off a general strike planned for this weekend, reducing the threat of supply disruptions from the world’s eighth largest crude exporter. Nigeria’s government has agreed to freeze fuel prices for a year, the main cause of the dispute.

ICE July Brent fell 98 cents to $70.20 a barrel while Nymex August West Texas Intermediate lost $1.24 at $67.90 a barrel.

Adding to downward pressure was news that Shell plans to restart operations at the Forcadoes oil export terminal in Nigeria next month. Attacks by militants forced its closure more than a year ago.

But fundamental support continues from concerns over US petrol supplies during the peak summer months for demand. US refinery utilisation is running 7.5 per cent below its five-year average and problems are ongoing with several refineries in Texas reporting production losses over the weekend.

Goldman Sachs said it was evident that the problems affecting US refineries were partly due to stresses caused by new more stringent product specifications.

It expects to see the US refining system recover but warned: “Continued stress on the US refining system, from the adjustment to the more stringent product specifications, could lead to further refinery outages, posing a downward risk to US refinery runs.”

The refining system problems have prompted more speculative interest across the energy complex, according to the latest data from the Commodity Futures Trading Commission.

Speculators have increased their net long position in gasoline (betting on further price appreciation) to the highest for three-and-a-half years, while the net long position in heating oil is the largest since October 2003.

Nymex July RBOB gasoline dipped 0.3 cents to $2.2834 a gallon.

In base metals, copper retreated to a low of $7,240 a tonne after an increase of 1,200 tonnes in LME stocks, suggesting Chinese copper demand is lacklustre. However, concerns about strikes in Latin America led to a price recovery. Workers at several facilities operated by Southern Copper in Peru launched strike action this weekend and subcontractors are trying to disrupt production at mines operated by Codelco, the state-owned Chilean mining giant. Copper rose 0.4 per cent to $7,465 a tonne.

Nickel rebounded 3 per cent to $38,800 after a fall of 480 tonnes in LME stocks but zinc‘s disappointing run continued with the three-month price sagging 0.6 per cent to $3,530 a tonne.

Lead surged 6.3 per cent to a new record at $2,700 a tonne. Barclays Capital said Chinese demand was strong and buying elsewhere in Asia was robust but physical markets in Europe and North America were weak. Barclays said price spikes were likely in the short-term but if prices continued to ignore softer market conditions outside Asia, it could spell danger.

Gold came under pressure after the Bank of International Settlements warned that central banks should keep raising interest rates to counter inflationary pressures. Gold fell to $649,30 before recovering to $653.60 in late trading in London.

Platinum retreated 1.2 per cent to $1,280 a troy ounce in spite of ongoing concerns about the possibility of strike action in South Africa; dealers said only serious disruptions to production would push prices higher.

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