Oil Futures Hold Gains With Egypt In Focus
Oil futures held their gains from the previous week in electronic trade Monday as the market braced for further violence in Egypt’s political crisis.
Crude oil for September delivery sat at $107.47, little changed from its $107.46 settlement Friday on the New York Mercantile Exchange.
October Brent crude improved by 8 cents, or 0.1%, to $110.48 a barrel.
Both Nymex and Brent futures saw gains last week as Egypt — where the Suez Canal and Suez-Mediterranean pipeline serve as key transit points for Mideast oil — saw deadly clashes between the army and supporters of ousted president Mohammed Morsi.
On Sunday, the Egyptian interim government held an emergency meeting as army chief Gen. Abdel Fattah al-Sisi vowed to continue “securing the state,” with more protests expected from Morsi’s supporters.
Other supply-related issues also helped oil over the past week, including strikes at Libyan facilities and maintenance in the North Sea fields that produce Brent crude.
But energy analysts at Citi Futures said late Friday that prices could easily head in the other direction, with a large number of long positions likely to unwind if news events point to a recovery to supply or a threat to demand.
“Increasingly, the market needs an ongoing diet of bullish news and upside price movement to keep them happy in the trade. And at the same time, the market also becomes increasingly vulnerable to bearish developments,” they said in a note to clients.
Among the possible triggers for a large unwinding of long positions, they said, were a resolution to Libyan strikes, a recovery in European production after North Sea oil-field maintenance, the seasonal decline in U.S. refinery runs, and any development that sparks a wider “risk-off” trade, such as the tapering of Federal Reserve stimulus or a U.S. debt-ceiling fight.
Most other energy-futures trade saw little movement, with September gasoline flat at $2.97 a gallon, and September heating oil remaining at its Friday settlement of $3.08 a gallon.
However, September natural gas rallied 4 cents, or 1.3%, to $3.41 per million British thermal units, erasing most of its 5-cent loss on Friday amid pre-weekend short-covering.
Source : Marketwatch
