Oil traded near its highest price in more than two years as concern that protests in Egypt may endanger Middle Eastern exports countered signs of rising supplies in the U.S., the largest crude consumer. Futures swung between a loss of 0.4 percent and gains of 0.6 percent today after the American Petroleum Institute said yesterday that U.S. stockpiles increased for a fourth week. An Energy Department report today may also show supplies climbed. Unrest in Egypt had sent Brent crude above $100 a barrel earlier this week. “The chief reason for oil’s rally through $100 is the return of the geopolitical risk premium,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “There has been a fresh inflow of speculative positions, though with stocks and spare production capacity ample, conditions don’t suggest a surge to new records.” Crude for March delivery was trading at $91.01 a barrel, up 24 cents, at 11:27 a.m. London time in electronic trading on the New York Mercantile Exchange. Prices settled at $92.19 on Jan. 31, the highest since Oct. 3, 2008. Brent oil for March settlement traded at $101.63 a barrel, down 11 cents on the ICE Futures Europe exchange in London. It gained 0.7 percent to $101.74 yesterday, the highest settlement since Sept. 26, 2008. Egyptian President Hosni Mubarak said he won’t stand down until elections due in September, angering the hundreds of thousands gathered in Cairo’s Tahrir Square to demand an immediate end to his regime. Suez Canal About 2.5 percent of global oil production moves through Egypt via the Suez Canal and the adjacent Suez-Mediterranean Pipeline, according to Goldman Sachs Group Inc. The waterway carries more than 2.2 million barrels of oil a day. There is “no real threat” to flows through the canal, Fatih Birol , chief economist at the International Energy, said today in a Bloomberg interview in Moscow. “We hope to see the market calm down because it is not good news for anybody in the market: consumers, producers or anybody.” Crude capped the biggest two-day rally since May on Jan. 31 on concern the unrest in North Africa will spread to crude- producing countries in the Middle East. Jordan announced a change of government yesterday following protests last week. Prime Minister Samir Rifai resigned and King Abdullah asked Marouf Bakhit, to form a new government. OPEC may increase oil production as depleting inventories and unrest in the Middle East push prices to the highest levels since 2008, BP Plc Chief Economist Christof Ruehl said. Brent Premium The oil market is “tightening” as economic growth this year expected to boost demand further, Ruel said in a Bloomberg television interview from Moscow. If the Organization of Petroleum Countries keeps output at current levels, “that would translate into a price increase all on its own, without the Egyptian situation,” he said. New York oil’s discount to Brent widened after the API said inventories at the Cushing, Oklahoma, hub climbed to a record. Brent’s premium over New York futures widened to $10.83 a barrel today. The difference was $8.82 on Jan. 31. The premium paid for April contracts in New York over March futures, known as the contango, rose to $2.76 a barrel in New York, the highest since May, as rising supplies depress nearer- term prices. The American Petroleum Institute reported that U.S. crude stockpiles increased 3.77 million barrels to 346.5 million last week. An Energy Department report today may show inventories climbed by 2.5 million barrels, according to the median of 15 analyst estimates in a Bloomberg News survey. Supplies in Cushing, the delivery point for West Texas Intermediate crude futures, gained 667,000 barrels to 38.4 million barrels, the most since Bloomberg data from the API begins in 2004. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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