Oil rose toward $70 a barrel on Monday after Nigeria's main militant group said it attacked a Royal Dutch Shell oil platform, outweighing a fairly bearish report from the International Energy Agency (IEA).

The Movement for the Emancipation of the Niger Delta (MEND) said in an emailed statement it struck the Shell Forcados platform in the Delta state.

There was no immediate independent confirmation but Shell said it shut in some oil production at its western operations in the Delta while it investigated reports of attacks on two well clusters in its Estuary Field.

U.S. crude for August delivery was up 42 cents at $69.58 a barrel by 1040 GMT (6:40 a.m. EDT). London Brent crude was up 33 cents at $69.25.

The Nigerian supply disruptions brought in some buying, said Christopher Bellew, broker at Bache Commodities in London, adding crude futures could push up above $70 later on Monday.

The news from Nigeria followed an announcement on Friday by four militant factions to accept in principle an amnesty offer from President Umaru Yar'Adua, raising hopes Africa's top oil producer would halt a battle with rebels.

Pipeline bombings, attacks on oil and gas installations and kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two-thirds of its installed oil output capacity of 3 million barrels per day.

The loss of output have been a supportive factor at a time when global recession has bitten deep into oil demand.

DEMAND FORECAST CUT

The IEA, adviser to 28 industrialised countries, has cut sharply its medium-term forecast for oil demand, saying there was a chance of an extended contraction, but added the threat of a supply crunch had only receded, not gone away.

Based on a higher economic growth scenario, the IEA predicted on Monday product demand would grow by 0.6 percent, or 540,000 bpd on average, between 2008 and 2014, taking demand from 85.8 million bpd to 89 million bpd.

The IEA's previous medium-term forecast, issued in December, had forecast growth of a million bpd a year from 2008 to 2013.

Algerian Energy and Mines Minister Chakib Khelil said on Monday oil demand was still weak due to the weakness of the U.S. and European economies and world oil stocks remained high.

Khelil said an increase in OPEC oil production was hard to envisage, despite rising crude prices.

Asian stock markets slipped on Monday with Japan's Nikkei average down 1 percent but European equities crept higher with firmer pharmaceutical and mining stocks outpacing weaker financial shares.

U.S. consumer confidence data on Tuesday leads a heavy calendar of economic data this week, including China's Purchasing Managers Index on Wednesday and a U.S. jobs report and manufacturing data on Thursday.

The U.S. data will help determine whether an oil market rally, which has lifted prices more than 50 percent this year on hopes of economic recovery, has any legs.

In the first big number for the week, industrial output from the world's No. 3 energy consumer Japan jumped 5.9 percent in May, the third straight month of increase after a big slump.

(Editing by James Jukwey)

Energy OPEC Nigeria