Oil steady, focus on Egypt, US employment
Crude oil futures were steady on Friday as Egypt's volatile situation kept markets on edge, and ahead of US employment data due later in the day.business Updated: Feb 04, 2011 17:36 IST
Crude oil futures were steady on Friday as Egypt's volatile situation kept markets on edge, and ahead of US employment data due later in the day.
US crude was 9 cents up at $90.64 a barrel by 0919 GMT. Brent crude for March shed 30 cents at $101.46 a barrel, after touching $103.37 on Thursday, the highest intraday price since Sept. 26 2008.
Front-month Brent has rallied more than $7 since unrest in Egypt started 10 days ago, from about $95 a barrel on Jan. 25. That 8 percent gain is more than a third of last year's total increase of 22 percent.
An analyst said that oil prices were likely to remain strong while the protests continue. Egyptians fighting to oust president Hosni Mubarak hoped to rally a million people on Friday, and the United States worked to convince the 82-year-old leader to begin handing over power.
"The OPEC president has said that oil above $100 is not desirable, but while Middle-East unrest continues prices will probably hold around here," Christopher Bellew of Bache Commodities said. "The terrible fear must be of this unrest spreading to a major producing country like Saudi."
The protests in Egypt are the latest in a wave of unrest across the Middle East and North Africa, which together produce more than one third of the world's oil.
"Ultimately, for the oil market, the uncertainties being introduced by the current political situation in Egypt have a far more long-term bearing," said Barclays Capital analysts Helima L. Croft and Amrita Sen.
The unrest in Egypt has not affected traffic on the Suez Canal or flows on the Suez-Mediterranean (SUMED) oil pipeline. Egypt controls both the canal and the pipeline, which together moved over 2 million barrels per day (bpd) of crude and oil products in 2009, the latest data available.
"Overall, the threat to the oil supply and the consequences of the oil supply loss seem relatively limited in this case, despite the heightened risks of a more violent transition to the new regime," Barclays Capital said.
Oil traders also awaited data on US non-farm payrolls for January due at 1330 GMT for readings on the health of the economy and energy demand in the world's largest oil consumer.
US hiring probably gathered steam in January, marking a fourth straight month of gains, but likely not enough to prevent the jobless rate from ticking up.
Non-farm payrolls are expected to have increased by 145,000 jobs, according to a Reuters survey, but severe snow storms that blanketed large parts of the country during the survey period could result in a much lower figure.
The International Energy Agency told the US Congress on Thursday that stronger-than-expected demand from rebounding economies as well unrest in Arab countries helped push Brent prices above $100 a barrel.