Oil pushes back above $100

9th February 2011, Comments 0 comments

World oil prices climbed back above $100 on Wednesday, ahead of the weekly energy report in the United States, and as protests intensified to oust Egyptian President Hosni Mubarak.

Brent North Sea crude for delivery in March advanced 68 cents to $100.68 per barrel.

New York's main futures contract, light sweet crude for March, which is also known as West Texas Intermediate (WTI), gained 40 cents to $87.34.

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 China's interest rate hike announcement 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 support after the American Petroleum Institute (API) forecast falling US crude oil supplies in its weekly report that was published 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."

Later on Wednesday, meanwhile, the US government will publish its official snapshot of American energy inventories in the week ending February 5.

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

"Concerns (over Egypt's political crisis) still linger, which continues to support crude oil prices," said Ong Yi Ling, investment analyst for Phillip Futures in Singapore.

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.

The canal carries about 2.4 million barrels of crude daily, roughly equal to Iraq or Brazil's output.


© 2011 AFP

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