Oil slips after Mubarak toppled by Egypt crisis

11th February 2011, Comments 0 comments

World oil prices slid this week, reassured by Egyptian president Hosni Mubarak ouster on Friday after a violent uprising that helped send the crude market to recent two-year peaks.

Cairo's streets exploded in joy as Mubarak stepped down after three decades of autocratic rule and handed power to military commanders.

In reaction, oil dipped on receding concerns over possible disruption to crude supplies through the strategic Suez Canal, analysts said.

"Initial reaction will be good for risk assets -- and this has seen oil, gold and silver slide and equities rise," said CMC Markets analyst Michael Hewson.

"The key test will be how the military fills the vacuum created by this action, and the effect this has on risk appetite going forward."

Commodities were also hit this week by worries over Chinese demand, after the nation's central bank raised interest rates for the third time in four months as authorities fight to tame inflation.

OIL: Prices dipped, with New York crude tumbling briefly under $86 per barrel on Friday after Mubarak's resignation was announced, but London Brent prices held stubbornly above the key $100 level.

"As Mubarak decided to step down, geopolitical concerns eased and (New York) crude oil prices retreated toward $86," said Sucden analyst Myrto Sokou.

"The potential shutdown in the operations at the Suez Canal looks very unlikely for the near-term.

Egypt's Vice President Omar Suleiman announced the handover on state television after an extraordinary national outpouring of rage brought more than a million furious demonstrators onto the streets.

Brent oil prices had rocketed last week to $103.37, striking the highest level since September 26, 2008, on concerns over the impact of Egyptian unrest on global energy supplies, and the possibility of spreading unrest.

SEB Commodity Research analyst Filip Petersson said that Mubarak's resignation created more uncertainty.

"Uncertainty is the first thing that comes into mind," Petersson told AFP in response to the news. "The military is officially in control now -- even though they have been so all the time -- but what will they do?

"My guess is that we will see a military-led dialogue and optimism in the country over the coming weeks. Some of the risk premium in the crude oil market is likely to fade as a result."

Oil market experts said the unrest, together with large US energy supplies, was helping to maintain a large gap between the prices of Brent and the benchmark New York crude contract.

Crude oil inventories increased by 1.9 million barrels last week in the United States -- the world's biggest oil consuming nation, the Department of Energy said.

By Friday afternoon on London's Intercontinental Exchange, Brent North Sea crude for delivery in March fell to $100.75 a barrel from $101.60 a week earlier.

On the New York Mercantile Exchange, Texas light sweet crude for March delivery slid to $86.13 a barrel from $90.73.

PRECIOUS METALS: Gold prices trimmed their gains on Friday as the metal lost some of its safe-haven llustre after Mubarak's resignation.

By late Friday on the London Bullion Market, gold rose to $1,364 an ounce from $1,355 a week earlier.

Silver rose to $30.00 an ounce from $28.91.

On the London Platinum and Palladium Market, platinum climbed to $1,829 an ounce from $1,838.

Palladium gained to $822 an ounce from $813.

BASE METALS: Copper prices hit a record $10,160 and tin soared to a record $31,800 per tonne, supported by concerns over tight supplies, before ending the week on a subdued note.

"Overall the metals remain just below recent highs and are in consolidation mode," said analyst William Adams at Fast Markets.

By late Friday on the London Metal Exchange (LME), copper for delivery in three months dipped to $9,910 a tonne from $10,060 a week earlier.

Three-month aluminium eased to $2,500 a tonne from $2,540.

Three-month lead fell to $2,511 a tonne from $2,577.

Three-month tin gained to $31,600 a tonne from $31,050 a week earlier.

Three-month zinc slid to $2,443 a tonne from $2,504.

Three-month nickel slipped to $28,053 a tonne from $28,185.

SUGAR: Sugar futures fell on profit-taking after striking a 30-year peak last week on fears about the impact of Cyclone Yasi on production in Australia.

By Friday on the New York Board of Trade (NYBOT), the price of unrefined sugar for delivery in March fell to 31.52 US cents a pound from 32.81 cents a week earlier.

On LIFFE, London's futures exchange, the price of a tonne of white sugar for March dropped to £756.20 from £801.90 a week earlier.

GRAINS AND SOYA: Prices advanced again to their best levels since 2008, as the market was driven once again by supply concerns.

By Friday on the Chicago Board of Trade, March-dated soyabean meal -- used in animal feed -- rose to $14.21 a bushel from $14.33 a week earlier.

Maize for delivery in March grew to $7.00 a bushel from $6.78.

Wheat for March increased to $8.58 from $8.53.

COCOA: Cocoa edged higher as traders remained jittery about ongoing political uncertainty in top global producer Ivory Coast.

By Friday on LIFFE, cocoa for March rose to £2,182 a tonne from £2,154 a week earlier.

On NYBOT, cocoa for delivery in March increased to $3,346 a tonne from $3,279 a week earlier.

COFFEE: Prices hit fresh multi-year peaks on the back of fears about tight global supplies.

By Friday on NYBOT, Arabica for delivery in March firmed to 254.15 US cents a pound from 250.20 cents a week earlier.

On LIFFE, Robusta for March rose to $2,258 a tonne from $2,218 a week earlier.


© 2011 AFP

0 Comments To This Article