Feb. 24 (Bloomberg) -- Crude oil rose after rebels who knocked out a fifth of Nigeria's oil production threatened further attacks against Africa's largest producer.

The Movement for the Emancipation of the Niger Delta, or MEND, will resume its offensive ``without further warning,'' Jomo Gbomo, a spokesman for the group, said today. MEND aims to shut 30 percent of Nigeria's production this month, after halting almost a fifth of its output with an attack on an export terminal six days ago. U.S. crude stockpiles were 12 percent higher than average last week.

``People are worried that although stocks are comfortable, there are places where supplies could be disrupted, specifically Nigeria,'' said Julian Lee, a senior analyst at the Centre for Global Energy Studies, a London-based think tank. ``Nigerian oil is valuable in terms of quality and location.''

Crude oil for April rose for the first time in three days, gaining as much as $1.26, or 2.1 percent, to $61.80 a barrel on the New York Mercantile Exchange. It was up $1.12 at 12:21 p.m. London time. Oil is still down 13 percent from August's record $70.85.

Prices fell 0.8 percent yesterday after the U.S. Energy Department reported that supplies of crude rose for a second week, reaching their highest level since June.

Still, less gasoline accumulated than expected, slowing the pace of growth of the previous seven weeks and raising concern supplies may be strained in summer as demand increases. Gasoline stockpiles reached their highest since 1999 the week ended Feb. 17.

Demand Growing

Demand for gasoline in the U.S. rose 2.3 percent in the four weeks through Feb. 17 from the year-earlier period, according to the Energy Department. Stricter environmental rules will prevent the use of gasoline containing some components later this year, constraining supplies further.

``The relatively high inventory levels are providing some cushion to the market, but of course demand is rising in the U.S.,'' said Francisco Blanch, a senior oil strategist with Merrill Lynch & Co. in London. ``We are in a more comfortable situation than a few months ago, but the structural problems this market has haven't gone away.''

Blanch expects prices of New York crude to stay close to $65 a barrel in coming months as demand grows and spare production capacity remains limited. An interruption in supplies from Nigeria or Iran could send prices higher for a short period, before the International Energy Agency coordinates the release of oil from emergency stockpiles as it did in September after the hurricanes in the Gulf of Mexico, he said.

In a weekly Bloomberg survey, twenty of 49 analysts, traders and brokers questioned, or 41 percent, said prices will drop next week because of rising U.S. crude supplies. Sixteen forecast a gain and 13 expected little change.

Iranian Talks

Iran and Russia have held unsuccessful talks this week, seeking Iran's agreement for Russia to process nuclear fuel for the Islamic republic in its own territory. An accord could break an impasse between Iran, the world's fourth-largest oil producer, and the U.S. and some European nations who say Iran plans to use atomic energy for a bomb and not for civil purposes.

Speculation that Iran may react to possible United Nations economic sanctions by cutting off oil exports sent prices to $69.20 on Jan. 23, their highest level in more than four months.

``The Iranian nuclear standoff has been an issue for the past year and a half and the market is keeping an eye there, but this is certainly not factored into prices,'' Merrill's Blanch said. ``People perceive a loss of Iranian supply as an event with very low probability. We would see a very swift reaction from the IEA to prevent prices from going higher.''

Nigerian Shutdown

Royal Dutch Shell Plc, Nigeria's largest oil producer, six days ago stopped output of 455,000 barrels a day in Nigeria, or about 1.5 percent of the oil pumped by the Organization of Petroleum Exporting Countries output, after militants set fire to the Forcados export terminal and kidnapped nine oil workers.

``We are continuing with our attacks on oil facilities and oil workers in the next few days,'' Gbomo, the rebel spokesman, said via e-mail.

Brent crude for April settlement jumped $1.11, or 1.8 today, to $61.65 on London's ICE Futures exchange.

The militants released photographs of the nine foreign workers they kidnapped on Feb. 18 from a Willbros Group Inc. boat near the Shell Forcados platform.

The attacks challenge Nigeria's plans to make one of the largest increases in production capacity among members of the Organization of Petroleum Exporting Countries, the source of more than a third of the world's oil. Nigeria's oil minister, Edmund Daukoru, said last month the country's capacity would rise by 600,000 barrels a day by mid-2006, or 23 percent, reaching a total of 4 million a day in 2007 from 2.6 million a day now.

Iraqi Output Declines

Oil production in Iraq, where the world's third-largest oil reserves are located, is falling because of sabotage and lack of investment. Output fell to 1.53 million barrels a day last month, the lowest level since Aug. 2003, five months after the U.S.-led invasion of the Middle Eastern country.

OPEC, the source of more than a third of the world's oil, meets in Vienna on March 8 to discuss whether to continue its policy of pumping close to capacity or reduce output to slow the accumulation of inventories.

Asked whether OPEC would trim production, Lee of CGES said: ``Not when the oil price is going up, at more than $60 a barrel. OPEC is still very concerned about the stocks in the U.S. and they ask themselves how long can this go on for,'' he said.

To contact the reporter on this story: Alejandro Barbajosa in London at abarbajosa@bloomberg.net

Last Updated: February 24, 2006 07:51 EST