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West Texas Intermediate crude dropped from a 14-month high after an official said Egypt’s Suez Canal is secure and ship traffic is “normal,” even as violence escalated in Cairo.

WTI fell 8 cents as Tarek Hassanein, a Suez Canal Authority spokesman, said that 55 ships were scheduled to pass through the channel. Prices topped $104 a barrel today as Egyptian security forces fought with supporters of ousted President Mohamed Mursi, leaving at least 51 dead. Egypt runs the canal and the Suez-Mediterranean Pipeline, through which Middle Eastern oil moves on its way to Europe.

“Traffic on the Suez Canal has been unaffected by the unrest in Egypt,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “There’s relief that the traffic is still moving. There won’t be a major fall in prices because the situation could spiral out of control at any moment and threaten the flow of oil.”

WTI crude for August delivery settled at $103.14 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 24 percent more than the 100-day average at 3:32 p.m. Futures rose to $104.12 early in the session, the highest intraday level since May 3, 2012.

Brent oil for August settlement decreased 29 cents, or 0.3 percent, to end the session at $107.43 a barrel on the London-based ICE Futures Europe exchange. The volume for all contracts was 2.5 percent above the 100-day average for the time of day. The European benchmark grade traded at a $4.29 premium to WTI, the least since Jan. 4, 2011, based on settlement prices.

Suez Traffic

A combined 2.24 million barrels a day of oil were shipped to Europe and North America in 2011 through the canal and Suez-Mediterranean Pipeline from the Red Sea, according to the U.S. Energy Information Administration. The Middle East accounted for 35 percent of global oil output in the first quarter of this year, International Energy Agency data show.

The military deposed Mursi on July 3, a year into his term, after popular discontent with his leadership culminated in days of protests against him. The flaring violence threatens to deepen political polarization and derail efforts by the country’s interim leaders to form a government.

BP Plc, BG Group Plc and Eni SpA have removed non-essential staff from Egypt, officials at the companies said, while Royal Dutch Shell Plc said it temporarily relocated some workers and dependents. Oil and gas output hasn’t been affected by unrest, the companies said. Egypt produced 728,000 barrels of oil a day in 2012 and 60.9 billion cubic meters of natural gas, BP said.

Libyan Production

Libyan oilfields and ports are back to normal after sit-ins that had stopped some production and loading, the state-owned Libya News Agency said today, citing an official it didn’t identify. The country has the largest proved oil reserves in Africa, according to BP’s Statistical Review of World Energy.

Repeated closures at facilities such as the Es Sider and Zueitina ports, led to fluctuations in the Libya’s oil production and exports. Crude output fell to 1.13 million barrels a day last month, the least since January, according to data compiled by Bloomberg.

WTI futures also slipped after a technical indicator signaled that prices have advanced too quickly. The 14-day relative strength index rose above 70 on July 5, according to data compiled by Bloomberg. Some investors start selling contracts when the reading is more than 70, a sign that speculative buying has driven prices unreasonably high.

“The RSI shot above 70, which implies an overbought situation,” Yawger said.

Financial Markets

Declines eased as U.S. equities climbed and the dollar dropped against most of its peers. The Standard & Poor’s 500 Index advanced 0.4 percent and the Dow Jones Industrial Average gained 0.6 percent.

The Dollar Index, which measures greenback against the currencies of six major U.S. trade partners, fell from a three-year high. A weaker dollar bolsters the appeal of commodities denominated in the U.S. currency as an investment.

Implied volatility for at-the-money WTI options expiring in August was 22.8 percent, down from 24.4 percent July 5, data compiled by Bloomberg showed.

“There’s tension in the market today,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “Equities are higher and the dollar is off its highs, which is sending a mixed message. In Egypt, there continues to be unrest, but oil keeps flowing through the Suez Canal.”

Electronic trading volume on the Nymex was 656,154 contracts as of 3:32 p.m. It totaled 615,153 contracts July 5, 4.6 percent below the three-month average. Open interest was 1.77 million contracts.

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