Oil rises as Kuwaiti strike cuts output for third day
By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices jumped more than 3 percent on Tuesday after a strike by workers in Kuwait nearly halved the OPEC member's crude production, overshadowing bearish sentiment after Sunday's failure by producers to agree to freeze output levels.
Thousands of Kuwaiti oil workers remained on strike for a third day on Tuesday to protest against planned public sector pay reform, cutting crude output to 1.5 million barrels per day (bpd), according to an oil spokesman cited by news agency KUNA.
That is little more than half of Kuwait's average output of 2.8 million bpd in March.
Reports of power outages leading to output declines of about 200,000 bpd in Venezuela and a pipeline fire in Nigeria that may have cut production by 400,000 bpd, along with the upcoming refinery maintenance season helped to support prices, traders said.
"The Kuwait strike in particular is a major factor. It was a bolt out of the blue in terms of how much oil came off the market so quickly," said John Kilduff, partner at Again Capital, a New York energy hedge fund.
"Usually these things have a ramp down period but this seems to be able to flick a switch ... It's supportive for the market for now."
A spokesman for the Kuwaiti oil and gas workers said on Tuesday their strike would continue until planned public sector pay reforms are canceled.
Brent crude futures settled up $1.12 at $44.03 a barrel while U.S. crude settled $1.30 higher at $41.08. Continued...