Oil Slips But Stays Above $101 On Egypt Unrest

Benchmark U.S. crude-oil futures slipped in electronic trade Thursday, but still hovered at their best level in more than a year following political unrest in Egypt.

Crude for August delivery  was off 7 cents, or 0.1%, at $101.17 a barrel.

The Egyptian military announced late Wednesday, shortly after oil trading closed on the New York Mercantile Exchange, that it had ousted Mohammed Morsi as the country’s president and suspended the constitution, which Morsi’s critics have said unfairly favored his Islamist allies.

Ahead of the announcement, oil prices in Wednesday’s Nymex session jumped by $1.64, or 1.7%, to $101.24 a barrel. Oil marked the highest settlement for a most-active contract since May 2012 as Morsi’s rejection of calls for his resignation intensified concerns about the oil sector in the Middle East.

Egypt isn’t a major oil producer, but it is a key transit hub for oil transported through the Suez Canal and the Suez-Mediterranean pipeline.

“It’s anyone’s guess as to how high crude oil can go when crisis erupts in the Middle East,” said Lido Isle Advisors to clients Wednesday after oil futures broke above $100 a barrel. “We believe this is a key breakout move, and would not be surprised to see crude head higher from here. Our next short term target is $103.40.”

Nymex trading will be closed on Thursday for the U.S. Independence Day holiday, and will reopen on Friday.

August futures for Brent crude  also slipped on Thursday from strong gains logged in the previous day, shedding 12 cents, or 0.1%, to $105.64 a barrel on ICE Futures. On Wednesday, they climbed $1.76, or 1.7%.

U.S. President Barack Obama said Wednesday he was “deeply concerned” about Morsi’s ouster by the military, and that he’s ordered a review of the legal implications for U.S. aid to Egypt in the wake of the developments.

Oil prices on Wednesday also rose after the U.S. Energy Information Administration said crude-oil supplies dropped by 10.3 million barrels for the week ended June 28. Analysts polled by Platts were looking for a decline of 3 million barrels.

The EIA also said weekly gasoline supplies and distillate stockpiles fell, while analysts had expected each to increase.

In trading Thursday, August gasoline  held at $2.84 a gallon, and August heating oil  shed 1 cent, or 0.4%, to $2.94 a gallon.

Natural gas for August delivery  slipped less than 1 cent to $3.686 per million British thermal units.

Source : Marketwatch