Oil soars on unrest in Egypt, US spending
The Age
Wednesday February 2, 2011
OIL traded near its highest in more than two years in New York yesterday, with Brent crude breaking $US100 a barrel as unrest in Egypt increased concerns of supply disruption.Oil futures gained 3.2 per cent as opposition groups demanding President Hosni Mubarak's resignation urged more people on to the streets. The US Energy Department classifies Egypt's Suez Canal, which links the Mediterranean and Red seas, as one of seven "world oil transit chokepoints"."The Middle Eastern premium is being factored into the market," Jonathan Barratt, of Commodity Broking Services in Sydney, said. "There's a supply issue if it escalates."On the New York Mercantile Exchange, crude oil for March delivery surged $US2.85 to $US92.19, the highest settlement since October 2008. Prices have risen 7.6 per cent since the Egyptian protests escalated on Friday. Oil rose 0.9 per cent in January and 24 per cent over the past year.Brent for March settlement gained $US1.59, or 1.6 per cent, to $US101.01 a barrel on the ICE Futures Europe exchange in London, its highest settlement since September 2008.Crude oil also rose in price yesterday after a report showed consumer spending in the US, the world's biggest crude-consuming nation, rose more than forecast.As well as unrest in Egypt, "strong US data was even more of a positive influence [on oil prices]", said Mark Pervan, head of commodity research at ANZ. "The firmer US consumer spending encouraged strong demand expectations for crude."The Organisation of the Petroleum Exporting Countries would increase output if the unrest in Egypt disrupted supplies, secretary-general Abdalla el-Badri said.The head of traffic for the Suez Canal Authority, Ahmed El Manakhly, said ships were passing normally through the canal, which was handling 45 to 50 vessels a day. He called the volume "normal".About 2.5 per cent of global oil production is shipped through Egypt, via the Suez Canal and the adjacent Suez-Mediterranean pipeline, according to Goldman Sachs.
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