Oil rises on Nigeria strike threat

By Matthew Robinson

NEW YORK (Reuters) - Oil prices rose on Thursday after concerns about a possible strike in Nigeria, Africa's top producer, stirred supply worries.

U.S. crude CLc1 settled up 36 cents at $136.74 a barrel, following a $5 surge in prices on Wednesday. London Brent crude gained $1.07 to settle at $136.09 a barrel.

Oil dipped as low as $131.55 earlier on the stronger dollar, before rebounding on news Nigeria's senior oil workers union renewed a strike threat against Chevron (CVX.N), raising supply worries.

A strike would further slash oil output in Nigeria, where a fifth of capacity has been shut in since early 2006, when ethnic militants in the Niger Delta began a violent campaign of sabotage against oil installations.

Oil's earlier losses came as the dollar gained on a government report showing total sales at U.S. retailers rose 1 percent in May, twice as much as expected.

A weak dollar in recent months has pushed investors into commodities as a hedge against inflation.

Oil's earlier losses also came amid news that U.S. regulators were seeking a deal with their counterparts in Britain to impose position limits on U.S. crude contracts traded on the ICE Futures Europe exchange.

The move by the U.S. Commodity Futures Trading Commission and the Financial Services Authority could shake some speculators out of the market, analysts said.