Oil above $101 on US supply drop, EgyptBy JONATHAN FAHEY
The Associated Press | July 04,2013AP Photo
Traders work in the oil options pit at the New York Mercantile Exchange on Wednesday as oil climbed above $101 a barrel as the political crisis in Egypt intensified.NEW YORK — The price of oil rose to its highest level in 14 months on concerns about possible disruptions to Middle East supplies and signs of an increase in U.S. demand for fuel.
U.S. benchmark oil gained $1.64 to $101.24, its highest close since May 3, 2012.
Brent crude, which is used to price oil used by many U.S. refineries to make gasoline, rose $1.76 to finish at $105.76.
Two events propelled the price of oil above $100 a barrel for the first time since the middle of September: unrest in Egypt, and a big drop in U.S. oil supplies.
Traders were worried that political upheaval in Egypt could slow the flow of oil from the Middle East to world markets. Embattled Egyptian President Mohammed Morsi vowed not to give in to protesters’ demands for his resignation. But the head of Egypt’s military announced late Wednesday night local time that Morsi will be replaced and new elections will be held.
Egypt is not an oil producer but it control of one of the world’s busiest shipping lanes gives it a crucial role in maintaining global energy supplies. The Middle East accounts for about a quarter of the world’s crude oil output, or 23 million barrels per day. About 2 million barrels of that, or 2.2 percent of world demand, are transported daily through the Suez Canal, which links the Mediterranean with the Red Sea.
Much of that oil is headed to Europe, but a supply drop anywhere in the world leads to higher prices everywhere.
“Markets tend to advance sharply on uncertainty and will often price in a worst case scenario. This appears to be the case with the unfolding situation in Egypt,” wrote Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.
Some analysts suggested market reaction to the political crisis in Egypt was exaggerated.
“If there is one thing that the military has control of in Egypt it is the Suez Canal. We therefore do not see a significant risk for free passage on the waterway,” said Olivier Jakob of Petromatrix in Switzerland.
In the U.S., the Energy Department reported Wednesday that crude supplies fell by 10.3 million barrels from the previous week, more than three times the drop that analysts had expected.
The drop was likely the result of reduced supplies from Canada because of a temporary pipeline shutdown there, as well as increased demand from a BP refinery that restarted in Indiana.
Gasoline supplies fell as well, while analysts expected an increase. The drop in oil and gas supplies could be an indication that U.S. demand is rising.
The rising price of oil could end what has been a streak of 21 days of lower U.S. retail gasoline prices. The average U.S. pump price fell less than a penny Wednesday to $3.48 per gallon.
Analysts do not think the spike in oil prices will lead to sharply higher gasoline prices, though, because U.S. crude supplies remain high and refineries are turning out plenty of gasoline.
U.S. commodities markets are closed Thursday for the July Fourth holiday.MORE IN National / World BusinessMike Solimano, president and general manager of Killington Resort & Pico Mountain, oversees a... Full StoryWalking into Fruition Fineries feels like stepping outside into the changing of the seasons. Full Story
- Most Popular
- Most Emailed
- RICHARD'S POOR ALMANACK: On this day 1739, 'Richard Palmer' identified in prison at York Castle as the notorious outlaw DICK TURPIN; IN 1836, Battle of the Alamo begins near San Antonio de Bexar, Texas; 1896, the Tootsie Roll invented by LEO HIRSCHFELD.
- RICHARD'S POOR ALMANACK: On this day in 1472, Orkney, Shetland islands put up as collateral by Norway to Scotland in lieu of dowry for MARGARET OF DENMARK on her marriage with JAMES III, king of Scotland; 1962, JOHN GLENN first American to orbit Earth.
- TOMORROW'S HEADLINES TODAY: City mayoral candidates debate campaign issues; Hartford, Conn., woman still missing; Neal Goswami reports attempts to legislate suicide; local woman loses 100 pounds through TOPS program.
- RICHARD'S POOR ALMANACK: On this day in 1878, JOHN TUNSTALL murdered near Lincoln, New Mexico, by the outlaw JESSE EVANS; in 1930, ELM FARM OLLIE first cow to fly in aircraft, first to be milked airborne; 1955, nuke test WASP; '79, snow in Sahara.
- TOMORROW'S HEADLINES TODAY: Rutland Herald News Editor Alan J. Keays and staff writer Gordon Dritschilo discuss stories planned for the February 18, 2015, edition of the newspaper: Winter budgets maxed, legal marijuana, Springfield bank job, USPS slowdown
- RICHARD'S POOR ALMANACK: On this day in 1249 AD, ANDRE of LONGJUMEAU is dispatched by LOUIS IX of France to meet the KHAGAN, ruler of the Mongol Empire; in 1804, during 1st Barbary War, STEPHEN DECATUR scuttles the pirate-held USS Philadelphia in Tripoli.