Crude Caps Longest Streak of Gains Since April

West Texas Intermediate crude capped the longest streak of gains since April as clashes in Egypt raised concern that Middle East supply will be cut.

Futures rose 13 cents. Thousands of people poured into the streets in Egypt today to protest the killing of supporters of ousted President Mohamed Mursi. Energy companies began evacuating personnel from platforms in the Gulf of Mexico as a storm threatened.

“We are seeing an escalation in Egypt and, obviously, that adds premiums to the market,” said Rich Ilczyszyn, chief market strategist and founder of commodities trading firm Iitrader.com in Chicago. “We’ve got a potential storm developing in the Gulf of Mexico. It pushes the market higher.”

WTI for September delivery settled at $107.46 a barrel on the New York Mercantile Exchange, the highest level since Aug. 1. The volume of all futures traded was 1.5 percent below the 100-day average at 2:52 p.m. Futures advanced 1.4 percent this week and are up 17 percent this year.

Brent for October settlement increased 80 cents, or 0.7 percent, to end the session at $110.40 a barrel on the London-based ICE Futures Europe exchange. Volume was 6.2 percent below the 100-day average. Brent’s premium to WTI was $3.11, based on October contracts for both crudes. It was $3.78 yesterday using September settlements.

Egyptian Demonstrations

Troops backed by tanks and helicopters surrounded Ramsis Square, a focal point of rallies in central Cairo. The Muslim Brotherhood, which called the protests, put the death toll at 60, while state-run Ahram Online said 27 people died, seven in the capital. Security forces and demonstrators also clashed in the provinces of Giza, Alexandria, Fayoum Ismailiya, Damietta, Port Said and Gharbiya.

Egypt controls the Suez Canal and the Suez-Mediterranean Pipeline, through which a combined 4.51 million barrels a day of crude and refined products were shipped between the Red Sea and the Mediterranean in 2012, according to the Energy Information Administration, the statistical arm of the U.S. Energy Department.

The Suez Canal is “secure and safe” and ship traffic through the waterway is normal, the Suez Canal Authority said in an e-mailed statement today. Fifty vessels carrying 2.8 million tons of cargo passed through the canal today, it said.

Mideast Supplies

“There are fears that the unrest in Egypt will spread to other countries and at some point disrupt oil supplies,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

The Middle East accounted for 35 percent of global oil output in the first quarter of this year, International Energy Agency data show.

“There’s no telling how the situation in Egypt will play out,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.6 billion. “The only thing that’s sure is that it isn’t pretty.”

BP Plc (BP/) began removing non-essential personnel from four offshore platforms in the Gulf as drilling rigs contracted by the company halted operations. Production “remains online,” according to a statement on its website. Marathon Oil Corp. (MRO) said it was clearing out some workers from its Ewing Bank facility in the Gulf.

The Gulf is home to about 6 percent of U.S. natural gas output, 23 percent of oil production and at least 45 percent of petroleum-refining capacity, according to the EIA.

Storm Forecast

The track of the storm currently off the Yucatan Peninsula is uncertain, the National Hurricane Center said in an advisory at 2 p.m. New York time. It has a 50 percent chance of becoming a tropical cyclone in two days, forecasters said.

“People don’t want to be short going into the weekend with all those storm activities,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago.

Crude fell as much as 0.7 percent earlier as signs that the economy is strengthening spurred speculation that the Fed may trim $85 billion in monthly bond purchases at a September policy meeting. The dollar climbed to a one-week high against the euro.

U.S. productivity increased more than projected in the second quarter, the Labor Department said today. Employers fired the fewest workers last week since before the recession began almost six years ago, according to Labor Department data yesterday.

Dollar Strengthens

“The dollar’s been strong because of the Fed tapering concern,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “We’ve been up for five straight sessions and what you are seeing here is some profit taking on the back of a stronger dollar.”

Implied volatility for at-the-money WTI options expiring in October was 21.4 percent from 21.8 percent yesterday, data compiled by Bloomberg showed.

Electronic trading volume on the Nymex was 539,768 contracts as of 2:52 p.m. It totaled 643,730 contracts yesterday, 1 percent below the three-month average. Open interest was 1.9 million contracts.

-- With assistance from Mark Shenk in New York. Editors: Margot Habiby, Dan Stets

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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