Where the action is: the crude futures pit
Brazil strike threat fires crude trade
Oil rose above $137 a barrel today after workers at Brazil's state oil company Petrobras said they would begin a five-day strike next week.
The market had been holding in a narrow range, supported by tensions over Iran, but the upside was limited by International Energy Agency forecasts for a more comfortable supply outlook next year.
US crude for August was $1.07 up at $137.12 a barrel by 1349 GMT. London Brent crude was $1.12 up at $137.70 a barrel.
The strike will affect all 42 Campos basin platforms, which account for more than 80% of Brazil's output of around 1.8 million barrels per day.
Iran tested more missiles in the Gulf today, while the US pledged to defend its allies.
"A second day of missile tests probably has less impact on prices than on the first day," Mike Wittner, an analyst at Societe Generale, told Reuters.
Iran test-fired nine missiles yesterday, which it said included ones that could hit Israel and US bases.
Concern over Iran has mounted after a big Israeli military exercise last month. The West fears Iran wants to master technology to build nuclear weapons.
Meanwhile, in its monthly report the IEA said world oil demand growth will slow in 2009 and the need for oil from Opec will fall.
This could help relieve the perceived tight supply/demand balance in the world oil market that has contributed to around a 50% jump in prices this year.
"We do see the potential for a build in spare capacity in 2009, that should help to improve the situation," said Lawrence Eagles of the IEA.
A pledge from Saudi Arabia to increase output this year could help provide more of a cushion for the market, he said.
Looking further ahead, Opec warned of growing uncertainty over demand for its oil in its 2008 World Oil Outlook.
Opec said demand for its oil could fall to 31 million barrels per day in 2012, below current production, as additions to supply excluding Opec crude outpace growth in demand.
Oil has fallen back from a record peak of $145.85 on 3 July, but had found some support from Iran tensions which helped the market hold above $135.50 a barrel yesterday, a key number for traders who use charts to track price movements.
The main militant group in Nigeria's oil-producing Niger Delta has said it would call off a ceasefire from midnight on Saturday after the UK offered to help tackle lawlessness in the region that has disrupted the country's oil exports.