Oil rose, extending a Jan. 28 gain that was the biggest in 16 months, as protests in Egypt stoked concern unrest will spread to crude-producing nations in the Middle East. Brent futures climbed to a 28-month high. Futures jumped as much as 1.7 percent after tens of thousands of protestors defied a curfew in Cairo, demonstrating against Egyptian President Hosni Mubarak for a sixth day. About 1 million barrels a day of oil and products moved north through the Suez Canal, which passes through Egypt, to European and other developed economies in 2009, according to the Energy Information Administration. Brent crude surged to 3 cents short of $100 a barrel. “The concerns in Egypt are playing on the commodity and financial markets,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said by telephone today. “The proximity to the Suez Canal and the possibility that there might be some constraints to supply is having an impact on the crude price.” Oil for March delivery gained as much as $1.53 to $90.87 a barrel in electronic trading on the New York Mercantile Exchange, and was at $89.52 at 2:15 p.m. Singapore time. Futures surged 4.3 percent on Jan. 28, the most since September 2009. Prices have dropped 2 percent in January, heading for the first monthly decline in five. Brent crude for March delivery climbed as much as 55 cents, or 0.6 percent, to $99.97 a barrel on the London-based ICE Futures Europe exchange. The benchmark last traded above $100 on Oct. 1, 2008. Brent’s premium to West Texas oil has narrowed to $10.02 from a record $11.75 on Jan. 27 as New York crude’s gains outpace prices in London. ‘Real Harm’ Any disruption to Middle East oil supplies “could actually bring real harm,” U.S. Energy Secretary Steven Chu said on a conference call on Jan. 28. Saudi Arabia and the other seven Middle Eastern and North African countries in the Organization of Petroleum Exporting Countries pump about 31 percent of world oil output, based on Bloomberg estimates. President Mubarak met with top military commanders yesterday as protesters defied a curfew and gathered in central Cairo, chanting slogans against his new prime minister and vice president. The unrest in Egypt followed an uprising that led to the Jan. 14 overthrow of Tunisian president Zine El Abidine Ben Ali. “Tensions in Egypt and potential spreading tensions to surrounding regions added a risk premium to oil prices,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note today. Hedge Funds Hedge funds cut bullish bets on oil last week by the most in two months before the political protests erupted in Egypt. The funds and other large speculators reduced net-long positions, or wagers on rising oil prices, by 18 percent in the seven days ended Jan. 25, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. That became a losing bet as prices surged at the end of the week. “We did not expect riots to break out in Egypt with the severity and speed at which they did,” The Schork Group Inc., a Villanova, Pennsylvania-based consultant, said in a report today. Money managers “have likely reversed or at least closed out the short positions they held as of Tuesday.” To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net. To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net.

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