West Texas Intermediate crude climbed to a 14-month high on concern that unrest in Egypt will escalate and speculation a strengthening U.S. economy will boost demand.
Futures rose as much as 1.2 percent in New York to $102.44 a barrel, the highest since May 4, 2012. U.S. employers created as many jobs in June as a month earlier, a Labor Department report showed today. Egypt declared a state of emergency in the provinces of South Sinai and Suez, al Ahram newspaper reported.
“Even though the news didn’t relate to the Suez Canal specifically, it nevertheless spooked the market,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said by e-mail. “It shows with what ease geo-political news can drive oil markets, especially when speculative accounts are already long and happy to buy more on any further break.”
WTI for August delivery was up 78 cents at $102.02 a barrel in electronic trading on the New York Mercantile Exchange at 1:51 p.m. London time. The volume of all futures traded was 61 percent more than the 100-day average, following sparse activity yesterday when Nymex pit trading was closed because of the U.S. Independence Day holiday. Yesterday’s electronic transactions will be booked today for settlement purposes.
The U.S. benchmark crude has advanced 5.7 percent since June 28 and is poised to end the week above $100 for the first time since April 2012.
Brent for August settlement was at $106.77 a barrel on the London-based ICE Futures Europe exchange, up $1.23 and headed for a second weekly increase. It earlier rose as much as 1.7 percent to $107.34, the highest since April 4. The European benchmark grade was at a premium of $4.75 to WTI contracts. The spread was $4.30 yesterday, the narrowest based on closing prices since January 2011.
Shipments of the four most important North Sea crude grades will drop 11 percent in August, according to loading programs obtained by Bloomberg News. Exports of Brent, Forties, Oseberg and Ekofisk, which which make up the Dated Brent benchmark, will be 754,839 barrels a day next month, compared with 851,613 barrels in July. Maintenance will curb Forties shipments next month.
U.S. non-farm payrolls rose by 195,000 workers in June, unchanged from a revised number for May, according to the Labor Department data.
The same report showed the unemployment rate at 7.6 percent, unchanged from May. The U.S. accounted for 21 percent of global oil consumption last year, compared with 11 percent for China, the second-biggest user, according to the International Energy Agency.
WTI surged above $100 a barrel this week for the first time since September 2012 as a political upheaval in Egypt heightened concern that unrest in the most populous Arab country will spread and disrupt regional oil supplies.
Goldman Sachs Group Inc. maintained its three-month forecast for Brent crude at $105 a barrel, saying there hasn’t been a supply disruption reported in Egypt. Still, the options market has turned “short-term bullish,” Jeffrey Currie, a New York-based analyst at the bank, said in an report e-mailed today.
Egypt’s army forced Mohamed Mursi from power a year after his election and a military-appointed interim president, Adly Mansour, was sworn in. The White House and most leaders in Congress have so far avoided describing the transition as a “coup,” which could cost Egypt more than $1.5 billion a year in military and humanitarian aid under U.S. law.
Egypt controls the Suez Canal and the Suez-Mediterranean Pipeline, through which a combined 2.24 million barrels a day of oil was shipped from the Red Sea to Europe and North America in 2011, according to the U.S. Energy Information Administration. The waterway remained open today with 28 vessels transiting from the north and 17 from the south, according to the Suez Canal Authority, even as al Ahram reported a state of emergency was declared in the province of Suez.
Futures will probably decline next week, a Bloomberg survey showed. Twenty-one of 36 analysts and traders, or 58 percent, forecast crude will decrease through July 12. Twelve respondents, or 33 percent, predicted a gain. Three projected no change. Last week, 39 percent in the survey forecast a drop.