Oil climbed in electronic trading in New York after Egyptian President Hosni Mubarak failed to resign in a speech late today and instead delegated powers to his deputy, Omar Suleiman. Oil rose as Mubarak refused to bow to the calls of protesters crammed into the center of Cairo demanding his immediate ouster. He spoke after floor trading ended and crude settled up 2 cents in New York. Egyptian unrest sent oil to two- year highs last month. “What we don’t know is if this is 1979 Iran all over again or if it’s completely different,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. Islamic clerics rose to power in Iran in 1979, ousting the U.S.- backed shah. The largest group opposing Mubarak is the Muslim Brotherhood. Oil for March delivery jumped 85 cents, or 1 percent, to $87.56 a barrel at 5:15 p.m. in electronic trading on the New York Mercantile Exchange. Earlier, it settled at $86.73 a barrel, 16 percent higher than a year earlier. Crude oil more than doubled in 1979 when the regime of Iran’s Shah Mohammed Reza Pahlavi was toppled, slashing the nation’s oil exports. Iran is OPEC’s second-largest oil producer after Saudi Arabia. Egypt controls the Suez Canal and the Suez- Mediterranean Pipeline, through which 2.5 percent of global oil production moves, according to Goldman Sachs Group Inc. Egyptian Unrest Hundreds of thousands of people have demonstrated in Cairo’s Tahrir Square since Jan. 25 seeking an end to Mubarak’s 30-year rule. New York oil futures surged to $92.84 a barrel on Jan. 31, the highest price since October 2008, amid concern that shipments through the canal would be disrupted and that political unrest in Egypt could spread to the Middle East’s big oil producers. Egypt’s top military body is staying in session in response to the “legitimate” demands of the people, according to a statement today. The International Energy Agency and OPEC said in reports today that if unrest in Egypt halts oil shipments through the canal, flows can be diverted through the SuMed pipeline and other export routes. Closure of the canal would have the biggest impact on Saudi Arabian and Iranian crude exports, while the most-affected customers would be China and Spain, the IEA said. Crude advanced earlier as U.S. jobless claims fell to the lowest level since July 2008 in a Labor Department report and the IEA and OPEC boosted their global oil-demand forecasts. The number of Americans filing first-time claims for unemployment insurance decreased by 36,000 to 383,000 in the week ended Feb. 4, Labor Department figures showed today. Economists forecast claims would fall to 410,000, according to the median estimate in a Bloomberg News survey. Demand Forecasts The IEA raised its 2011 consumption estimate by 140,000 barrels a day, and the Organization of Petroleum Exporting Countries said it will have to pump 400,000 barrels a day more than it estimated last month. Global oil demand will increase by 1.5 million barrels, or 1.7 percent, to 89.3 million a day this year, the IEA said today in its monthly Oil Market Report. OPEC’s estimate of global consumption this year is 1.8 percent lower than the IEA’s at 87.7 million barrels a day. OPEC will reduce oil shipments this month as demand for winter fuels in the Northern Hemisphere fades, according to tanker-tracker Oil Movements. Loadings will slip to 23.79 million barrels a day in the four weeks to Feb. 26, down 0.6 percent from 23.94 million in the period ended Jan. 29, the tanker-tracker said today in a report. The data exclude Angola and Ecuador. It’s the first monthly drop since the four weeks ended Feb. 5. Heating Oil Heating oil for March delivery tumbled 5.82 cents, or 2.1 percent, to $2.7107 a gallon on the Nymex, the biggest drop since Nov. 17, as a forecast for higher temperatures in the U.S. Northeast increased speculation that demand for home-heating fuel will drop. “There’s temperature moderation on the horizon,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. Brent crude for March settlement fell 20 cents to $101.62 a barrel at 5:03 p.m. in New York, paring an earlier decline. The contract dropped 95 cents, or 0.9 percent, to settle at $100.87 a barrel on the ICE Futures Europe exchange in London. Brent cost $14.14 a barrel more than New York futures at the settlement. The differential rose to a record $15.11 a barrel yesterday. “A lot of what we are seeing is due to the spread between WTI and Brent,” said Kyle Cooper, director of research for IAF Advisors in Houston. “The spread between the two grades has got to come back in line. A Brent premium of $2 or $3 makes sense, not $15, especially given that WTI is a higher-grade crude.” Oil volume in electronic trading on the Nymex was 1.02 million contracts as of 5:23 p.m. in New York. Volume totaled 985,397 contracts yesterday, 37 percent above the average of the past three months. Open interest was 1.55 million contracts. To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net. To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

Source