MW:Oil rises above $101 as turmoil spreads in Egypt
By Carla Mozee, MarketWatch
MADRID (MarketWatch) — Benchmark U.S. crude-oil futures rose past $101 a barrel in electronic trade Wednesday, surging on concerns about the Middle East oil trade, after Egyptian President Mohammed Morsi rejected calls for his resignation amid an extremely tense standoff with protestors.
Crude for August delivery CLQ3 +1.47% came off a level that saw it shoot past $102 a barrel during Asian trading hours. Crude rose $1.61, or 1.6%, to $101.19 a barrel, which is still around levels not seen since May 2012.
On Tuesday, oil prices on the New York Mercantile Exchange closed at $99.60, the highest settlement for a most-active contract since May 2012.
Wednesday’s sharp rise for crude came as Morsi, in a late-night address carried on Egyptian state television, said he was willing “to pay my life to protect the legitimacy” of the democratic process and the country’s constitution. Opposition protesters say the new constitution unfairly favors Morsi’s Muslim Brotherhood movement.
The army has reportedly said it will spill its own blood to defend Egypt against “any terrorist, radical or fool,” the BBC reported. Media reports said 16 people died and 200 were injured on Tuesday in clashes at Cairo University in Giza.
Prices for the August futures contract for Brent crude UK:LCOQ3 +0.86% also extended gains, but fell back from higher Asia levels. Brent rose 82 cents, or 0.8%, to $104.91 a barrel on ICE Futures.
Millions of protestors in Egypt are calling for Morsi’s resignation, a year into his term as the country’s first democratically elected president.
Although Egypt doesn’t export oil, it serves as a transit hub for oil through the Suez Canal and the Suez-Mediterranean pipeline.
On Monday, the Egyptian military warned Morsi that it would intervene in the political crisis if Morsi didn’t resolve it within 48 hours.
If a compromise in the situation isn’t reached soon, “it is hard to see how Morsi can stay in power for much longer. Many of his ministers have already resigned as the administration seems to be crumbling from both the outside and the inside,” said Brown Brothers Harriman currency analysts, led by Marc Chandler, in note on Tuesday.
In addition to Egypt, the ongoing civil war in Syria remains a point of concern among energy traders because of Syria’s proximity to oil-rich Iraq.
Oil prices in electronic trade late Tuesday got a boost after a report showed U.S. crude supplies fell three times more than expected for the week ended June 28. The American Petroleum Institute said supplies fell by more than 9 million barrels, while analysts polled by Platts had expected a decline of 3 million barrels.
The more closely watched inventory report from the U.S. Energy Informational Administration is due Wednesday at 10:30 a.m. U.S. Eastern Time.
In other energy trading Wednesday, August gasoline RBQ3 +0.73% rose 2 cents, or 0.7%, to $2.80 a gallon, and August heating oil HOQ3 +0.77% climbed 2 cents, or 0.7%, to $2.92 a gallon.
The API said gasoline inventories last week fell by 200,000 barrels, and distillate stockpiles declined by 2.3 million barrels. Analysts had expected an increase in inventory for both.
Natural gas for August delivery NGQ13 -0.58% , fell 3 cents to $3.62 per million British thermal units. Prices climbed 2.2% on Tuesday.
