* Oil extends fall of nearly $5 on China fuel price hike
* Shell shuts 220,000 bpd oil output in Nigeria
* Venezuela threatens to cut supply to Europe
SINGAPORE, June 20 (Reuters) - Oil slipped further on
Friday, after a nearly $5 plunge a day ago, as China's move to
raise fuel prices raised concerns that demand in the world's
second-largest oil consumer will fall.
U.S. July crude <CLc1>, which expires later in the day,
fell 66 cents to $131.27 a barrel by 0136 GMT. London Brent
<LCOc1> fell 52 cents to $131.48.
China unexpectedly raised retail gasoline and diesel prices
by up to 18 percent on Thursday, its first hike in eight
months, as the government bowed to the around $40 a barrel
increase in crude prices since the last hike in November.
[]
China's rapid demand growth was one of the catalysts for
oil's almost seven-fold surge from $20 six years ago to a
record high of nearly $140 a barrel earlier this week.
"Allowing an increase in the controlled fuel prices in
China may temper growth in fuel demand in China, helping
moderate demand-based pressure on oil prices," David Moore, an
analyst with Commonwealth Bank of Australia, said in a research
note.
High fuel costs have already shown signs of denting demand
in consumers such as the United States and Britain.
Americans cut down on the number of miles they drove for
the sixth straight month in April, resulting in the biggest
six-month decline since the oil shock of the 1979-80 Iranian
revolution. []
But some analysts said Beijing's move might instead bolster
consumption by encouraging healthier supply at the pumps, which
had faced long queues and rationing as refiners cut back on
production to limit hefty losses made by selling discounted
fuel. []
"Don't expect much demand destruction...certainly not
enough to outweigh the increase in output from improved
economics," said Trevor Houser, analyst at Rhodium Group in New
York.
NIGERIA ATTACKS
Supply concerns in Nigeria provided some support, after
militants in speedboats attacked Royal Dutch Shell's <RDSa.L>
main 220,000-barrel-per-day Bongas offshore facility in Nigeria
and cut oil output at the world's eighth-largest oil producer
by a tenth. []
Shell said it was too soon to say how long output at the
deepwater installation would be shut down.
OPEC member Nigeria is already producing about 20 percent
below its potential due to sabotage by militants in the
southern Niger Delta oil hub.
In Venezuela, President Hugo Chavez threatened to stop
selling oil to European countries if they apply a new ruling on
illegal immigrants that allows them to be detained for up to 18
months and face a re-entry ban of up to five years.
"Venezuelan oil will not go to the countries that apply
this shameful directive. I'll say it now, Venezuelan oil will
not go," Chavez said. []
The comment came after the country said it would not attend
the emergency meeting on Sunday in Saudi Arabia between
consumers and producers to discuss rising oil prices.
Saudi Arabia, the world's top exporter, is hiking output to
help bring down prices, which have jumped nearly 40 percent
this year and caused protests around the globe.
Venezuela insisted that supply is not to be blamed for
soaring crude prices.
Goldman Sachs raised its oil price forecast further on
expectations of continued supply tightness, predicting Brent
oil would average $117 a barrel this year, up from its previous
estimate of $108.
The bank forecast Brent crude prices will average $140 next
year.
(Reporting by Chua Baizhen, Editing by Michael Urquhart)
