AT: Oil nears $102 on report of Suez Canal disruptions
By Laura Mandaro and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures advanced toward $102 Friday after reports circulated that Egypt had closed off its borders with the Gaza Strip and announced a state of emergency in the Suez and Sinai provinces.
The Suez Canal, an important thoroughfare for oil traffic, is still operating normally, Reuters reported, citing unnamed sources. An Egyptian state-owned newspaper first reported that the border was being shut down due to security threats.
Crude for August delivery CLQ3 +0.64% gained 68 cents, or 0.7%, to $101.95 a barrel from Wednesday’s settlement on the New York Mercantile Exchange, which was closed Thursday for the Independence Day holiday.
The trading level reversed mild losses in Thursday’s electronic action, when Nymex crude shed 7 cents.
On Friday, August futures for rival benchmark Brent oil UK:LCOQ3 +0.93% rose $1.33, or 1.2%, to $106.84 a barrel.
Nymex oil briefly topped $102, before returning to earlier gains after the Labor Department said the U.S. economy added 195,000 jobs in June, far exceeding forecasts for gains of 155,000. April and May jobs growth was revised up. U.S. stock futures and benchmark government bond yields jumped after the report.
The gain for U.S. crude came as the U.S. dollar made a solid advance, with the ICE dollar index DXY +0.72% rallying to 84.422 from its 83.291 seen late Thursday in North America.
Since crude oil is denominated in dollars, a rise in the U.S. currency can dampen prices by making oil futures more expensive for holders of euro, yen and other units.
U.K.-based tanker-tracker Oil Movements said Thursday that seaborne crude shipments from the Organization of the Petroleum Exporting Countries appeared to be on the rise.
OPEC sea-traffic, excluding that from Angola and Ecuador, was expected to rise by 540,000 barrels a day in the four weeks to July 20 versus the previous four weeks, it said.
Egypt controls the key Suez Canal seaway and adjacent pipeline used for a significant amount of oil traffic, and the stand-off between the Egyptian military and now-ousted president Mohammed Morsi was tied to Wednesday’s 1.7% surge in Nymex crude futures.
Jeffrey Currie, head of commodities research at Goldman Sachs, said in a note dated July 4 that he is keeping a $105-a-barrel forecast over a three-month horizon. Citing market concerns around instability in Egypt, he noted that even during the Arab Spring uprisings across the Middle East in 2011, Egypt saw no crude oil physical disruptions.
Among other energy-futures trade Friday, August gasoline RBQ3 +0.73% edged up 2 cents to $2.85 a gallon, while August heating oil HOQ3 +0.86% was up 2 cents to $2.97 a gallon.
Natural gas for August NGQ13 -2.47% was down 8 cents, or 2%, at $3.61 per million British thermal units.
Laura Mandaro is MarketWatch's Markets editor, based in San Francisco. Follow her on Twitter @lauramandaro.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer. Michael Kitchen in Los Angeles contributed to this story.
