BLBG: Oil in New York Trades Near Two-Year High on Concern Over Egypt
Oil traded near the highest in more than two years in New York and Brent crude topped $100 a barrel after a seventh day of unrest in Egypt raised concern supplies may be disrupted.
Futures gained 3.2 percent yesterday as opposition groups demanding President Hosni Mubarak’s ouster urged more people onto the streets. Egypt’s Suez Canal, which links the Mediterranean and Red seas, is one of seven “world oil transit chokepoints,” according to the U.S. Energy Department.
“The Middle Eastern premium is being factored into the market,” Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, said by telephone. “There’s a supply issue if it escalates.”
Crude for March delivery was at $92.09 a barrel, down 11 cents, in electronic trading on the New York Mercantile Exchange at 11:50 a.m. Sydney time. Yesterday, it surged $2.85 to $92.19, the highest settlement since Oct. 3, 2008. Prices have risen 7.6 percent since the Egyptian protests escalated on Friday. Oil rose 0.9 percent in January and 24 percent over the past year.
Brent for March settlement gained $1.59, or 1.6 percent, to $101.01 a barrel on the ICE Futures Europe exchange in London yesterday, the highest settlement since Sept. 26, 2008. It touched $101.73 on an intraday basis.
Crude oil also increased yesterday after a report showed consumer spending in the U.S., the world’s biggest crude- consuming nation, rose more than forecast.
“The unrest in Egypt continued to be supportive with the market pricing in a geopolitical risk premium,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note today. “Strong U.S. data was even more of a positive influence. The firmer U.S. consumer spending encouraged strong demand expectations for crude.”
Purchases, which account for about 70 percent of the economy, rose 0.7 percent in December, from 0.3 percent the prior month, Commerce Department figures showed yesterday in Washington. The December figure topped the 0.5 percent median estimate of 67 economists in a Bloomberg News survey.
Suez Canal
The Organization of Petroleum Exporting Countries will increase output if current unrest in Egypt disrupts supplies of crude from the Middle East, Secretary-General Abdalla el-Badri said in London yesterday.
Ships are passing normally through the Suez Canal, which is handling 45 to 50 vessels a day, said Ahmed El Manakhly, the head of traffic for the Suez Canal Authority, the waterway’s operator. He called the volume “normal.”
About 2.5 percent of global oil production is shipped through Egypt via the Suez Canal and the adjacent Suez- Mediterranean Pipeline, according to a Goldman Sachs Group Inc. report yesterday.
The canal has the capacity to handle 2.2 million barrels of oil a day while that of the Sumed oil pipeline is 2.3 million barrels a day, Goldman said. Actual volumes in 2009 were a combined 2.1 million barrels because of cuts in production by OPEC, the bank said.
An Energy Department report tomorrow may show that U.S. crude oil inventories climbed by 2.5 million barrels last week from 340.6 million, according to the median of 11 analyst estimates in a Bloomberg News survey.
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
