By Ben Sharples - Jan 31, 2011 8:18 AM GMT+0800
Oil rose for a second day in New York after unrest in Egypt prompted concern that protests may spread to crude-producing parts of the Middle East.
Futures increased 4.3 percent on Jan. 28, the most since September 2009, after clashes between police and protesters demanding an end to Egyptian President Hosni Mubarak’s 30-year regime. Any disruption to Middle East oil supplies “could actually bring real harm,” U.S. Energy Secretary Steven Chu said on a conference call.
“The concerns in Egypt are playing on the commodity and financial markets,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “The proximity to the Suez Canal and the possibility that there might be some constraints to supply is having an impact on the crude price.”
Crude for March delivery gained $1.53, or 1.7 percent, to $90.87 a barrel, in electronic trading on the New York Mercantile Exchange at 11:14 a.m. Sydney time. The contract increased $3.70 to $89.34 on Jan. 28. Oil was up 0.3 percent last week and is down 1.3 percent this year.
President Mubarak met with top military commanders yesterday as tens of thousands of protesters defied a curfew and gathered in central Cairo, chanting slogans against his new prime minister and vice president. The unrest in Egypt followed an uprising that led to the Jan. 14 overthrow of Tunisian president Zine El Abidine Ben Ali.
“Tensions in Egypt and potential spreading tensions to surrounding regions added a risk premium to oil prices,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note today.
Saudi Arabia is the world’s largest oil exporter. The kingdom and the other seven Middle Eastern and North African countries in the Organization of Petroleum Exporting Countries pumped 78 percent of the group’s oil in January, based on Bloomberg estimates.
The Suez Canal, which connects the Mediterranean and Red Seas, passes through Egypt. About 1 million barrels a day of oil and refined products moved north through the canal to European and other developed economies in 2009, according to the Energy Information Administration, the statistical arm of the U.S. Energy Department.
Crude futures also rose on Jan. 28 as U.S. gross domestic product grew 3.2 percent between October and December, the fastest since the first quarter, according to the Commerce Department. It was up from a 2.6 percent rate in the previous three months. The most recent figure fell short of the 3.5 percent forecast by economists in a Bloomberg News survey.
Brent crude for March delivery rose 29 cents, or 0.3 percent, to $99.71 a barrel on the London-based ICE Futures Europe exchange. It gained $2.03, or 2.1 percent, to $99.42 on Jan. 28.