Brent oil pushes back above $100

9th February 2011, Comments 0 comments

World oil prices diverged on Wednesday, as traders mulled buoyant US energy reserves, but London Brent held above $100 amid ongoing political turmoil in Egypt.

Brent North Sea crude for delivery in March advanced 69 cents to $100.61 per barrel.

But New York's main futures contract, light sweet crude for March, dipped 21 cents to $86.73.

The US government's Department of Energy announced Wednesday that American crude oil inventories increased by 1.9 million barrels last week, rising for the fourth successive time.

Distillates, which include diesel and heating fuel, rose by 300,000 barrels, while gasoline or petrol leapt by 4.7 million barrels.

"The most interesting information in these stats is the weakness in gasoline and diesel demand," said Credit Agricole CIB analyst Christophe Barrtet.

"Early indications of a slowdown in demand, in response to recent very high prices, must be watched very carefully, as such a move could trigger a sharp reversal in oil prices."

At the same time, the differential between Brent oil and New York crude has hit a record amount, as abundant US supplies continued to weigh on the WTI contract.

Oil sank on Tuesday as news of a Chinese interest rate hike sparked worries about the impact on energy demand, but the fall was countered by a weaker dollar and political uncertainty in Egypt.

Prices also won limited support after the American Petroleum Institute (API) forecast falling US crude oil supplies in its weekly report late Tuesday.

"The rate hike in China weighed on commodity prices only briefly, with people evidently believing China's demand for commodities will not be dampened by the interest rate move," said Commerzbank analyst Carsten Fritsch.

"Brent has taken the $100 a barrel mark again overnight after the API reported a surprising decline in US crude stocks last week by 558,000 barrels."

Meanwhile, oil won modest support from ongoing market jitters over unrest in Egypt.

Several hundred Egyptian protesters attempted to block parliamentary buildings in Cairo on Wednesday as part of their campaign to oust Mubarak's 30-year-old regime.

The building was protected by troops backed by armoured vehicles, but there was no violence, with protesters instead staging a sit-in to blockade the lower house, just as others have occupied Cairo's Tahrir Square.

Parliament is dominated by Mubarak's ruling National Democratic Party (NDP), thanks to tight rules on who can stand for election, and the protesters said they saw it as part of his autocratic regime.

Traders fear that Egyptian unrest could affect crude oil supply in the Suez Canal. The canal is a key shipping route cutting through Egypt, providing a sea link between Europe and Asia and allowing ships safer and faster travel between the two regions without having to sail around the African continent.


© 2011 AFP

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