After dropping sharply over the past three days, oil prices bounced back modestly Friday to trade at slightly less than US$131 a barrel after news of a pipeline problem in Nigeria.
Nigerian officials said they had shut off some pipelines after "a sudden drop in pressure" following an explosion in the southern part of the country.
"I can confirm that there was an explosion, but we don't yet know if the pipeline was vandalized or if it was an accident," Col. Chris Musa, the head of the Bayelsa State military, told The Associated Press.
One of Nigeria's major militant groups -- the Movement for the Emancipation of the Niger Delta -- denied setting the blast. Armed gangs have regularly taken aim at oil facilities in the country's southern river delta region. Attacks over the last two years have taken their toll on Nigeria's oil output, which has been cut by almost 25 per cent.
International oil prices have dropped by about $16 in the past three days. Light sweet crude for August delivery was going for US$130.88 a barrel late in the morning on the New York Mercantile Exchange.
But analyst Olivier Jakob of Petromatrix in Switzerland said there was "deeper trouble" for oil prices.
"Buying here is an opportunity if you are a deep believer in US$200 (a barrel); otherwise we think that caution would be better applied," he wrote in a research note.
BNN's Michael Kane told CTV's Canada AM his survey of analysts' predictions about the direction of oil prices may be good news for consumers at the pumps.
"About half of (the analysts) were expecting that oil prices will continue to decline throughout next week. This is really good for all of us," he said.
Energy industry consultant Michael Ervin told The Canadian Press that demand for gasoline has softened in North America.
Statistics Canada said that gasoline sales were down about three per cent nationwide between May of this year and last.
On Friday, prices dropped for the third time this week in the Toronto area and were hovering at the $1.26 cents per litre mark -- about two cents cheaper than drivers in Edmonton are paying.
But prices in other Canadian cities haven't experienced the same decline. In Vancouver, the lowest price for gas, according to the website vancouvergasprices.com, is still about $1.38 cents per litre. That's about the price drivers are paying in the Montreal area. Halifax residents were paying about four cents more per litre than their Montreal and Vancouver counterparts on Friday morning.
Kane said gas prices may come down next week, but consumers can expect to pay more for gas over the long run.
"The long term trend remains towards the upside for oil ... anything can happen," he said.
Analysts say U.S. Federal Reserve Chairman Ben Bernanke's warning that the American economy faces "significant challenges" and reports of rising oil inventories have made investors more cautious in recent days.
With files from The Canadian Press and The Associated Press
