Oil prices settled above $71 a barrel Monday, as China said it would boost oil reserves and Nigerian militants partly shut down an offshore oil platform belonging to Royal Dutch Shell PLC.
Benchmark crude for August delivery gained $2.33 to settle at $71.49 a barrel on the New York Mercantile Exchange.
Alaron Trading Corp. analyst Phil Flynn said China's plans to increase its strategic crude oil reserves by 60 percent should provide the market with some long-term support.
Shell spokesman Precious Okolobo confirmed the Nigeria attack and partial shutdown. Previous militant attacks on infrastructure in the country's restive southern oil region have trimmed output in Africa's biggest crude producer by about 25 percent.
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Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said a barrel of oil has been hovering around where it started the month, and he expects the trend of sideways trading will likely continue. Volume is typically low in the days leading up to a holiday weekend.
Monday's jump in oil came despite a report from the International Energy Agency predicting a slower rebound in global energy demand.
The IEA said demand is likely to grow by an average of 0.6 percent annually over the 2008-2014 period. It would reach 89 million barrels a day by 2014 assuming the International Monetary Fund's current forecast of a return to 5 percent annual economic growth by 2012, the agency said.
The IEA report drove down natural gas prices, as the Paris-based agency forecast that demand this year will drop for the first time in 50 years. Natural gas for July delivery fell 16.1 cents to settle at $3.944 per 1,000 cubic feet in Nymex trading.
Meanwhile, retail gasoline prices, which fell for the first time in nearly two months a week ago, continued their pullback as the average price of a gallon of regular unleaded gas fell overnight by four-tenths of a cent to $2.639, according to AAA, Wright Express and Oil Price Information Service.
That's still about 15 cents a gallon higher than last month, but $1.44 cheaper than this time last summer.