* Oil surges to eight-month high above $73 a barrel
* Trade volume more than 15 times Asia norm, Brent in focus
* End-quarter fund covering may be behind sudden move
* Nigeria attacks, risk sentiment also aid gains
* On track for 47 pct Q2 gain, biggest since 1990
By Fayen Wong
PERTH, June 30 (Reuters) - Oil prices jumped more than 2
percent to a new eight-month high above $73 a barrel on Tuesday
amid a surprise spike in Brent activity that dealers said may
be linked to end-of-quarter positioning by one or more funds.
Trading volume in both Brent and U.S. crude oil futures
surged to more than 15 times the norm for the Asian time zone,
but dealers were hard pressed to find a specific trigger for
the over $1.50 leap in prices in under half an hour around 10
a.m.
The rally had some fundamental support from fresh attacks
on oil facilities in Nigeria as well as improving risk
sentiment aided by rising equity markets, but traders said
those factors were secondary to the sudden big Brent bid orders
that overwhelmed liquidity during the thin Asian trading
period.
"It feels like short-covering because of stop orders left
overnight," said a trader with a global investment bank. "Crude
was up $1.50 this morning before the big wave of buying came."
U.S. crude for August delivery <CLc1> spiked to an
eight-month high of $73.38 a barrel, but later eased to trade
at $72.94 a barrel, up $1.45 or 2 percent on the day.
London Brent <LCOc1> trading volume in the front month
contract surged to more than 16,000 lots versus the less than
1,000 lots that normally trade in Asian hours, gaining $1.85 a
barrel to $72.84, having touched an eight-month high of $73.50.
A broker added: "I suspect some parties were trying to push
prices higher in quiet Asian trading and make a run before the
end of the quarter to close off their first half."
Traders agreed that the ICE Brent contract -- not the NYMEX
crude that is normally more liquid in Asia -- had led the
rally, partly supporting the notion that concerns about
supplies of nearby Nigerian crude had helped fuel gains.
Nigeria's main militant group said its fighters had
attacked an oil facility belonging to Royal Dutch Shell
<RDSa.L> in the Niger Delta on Monday, days after President
Umaru Yar'Adua proposed an amnesty. []
But most were quick to point the finger at one or several
big funds, either closing out loss-making positions, dressing
up quarterly gains or perhaps taking a position in anticipation
of an influx of new funds at the start of the third quarter.
"This could be end of quarter movement, and traders are
trying to push prices higher and then selling before closing
their books," said Mark Pervan, senior commodities analyst at
ANZ Bank. "I haven't seen any new catalyst on the news front."
Driven by hopes of a global economic recovery, oil prices
are on track to post a near 50 percent jump in the second
quarter, the highest quarterly percentage gain since 1990.
Asian stocks opened higher on Tuesday, helped by gains on
Wall Street and rising optimism over the economic outlook.
The International Energy Agency mid-term oil forecast said
there was a chance of an extended economic contraction and the
threat of a supply crunch had only receded, not gone away.
[]
(Editing by Michael Urquhart)
