WTI Oil Trades Near Two-Week High Amid Unrest in Egypt
West Texas Intermediate crude traded near the highest price in two weeks as an escalating conflict in Egypt fanned concern that oil shipments through the country may be disrupted.
Futures were little changed after rising for a fifth day yesterday, capping the longest stretch of gains since April. Thousands of Egyptians poured into the streets after Friday prayers to protest the killing of supporters of ousted President Mohamed Mursi. A weather system heading for the Gulf of Mexico has a 50 percent chance of becoming a tropical cyclone in the next two days. Crude and fuel export terminals in Libya remain closed, while Iraq’s oil ministry said the nation plans to increase exports in September.
“The market isn’t sure of future direction and is looking at the news on balance,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said by phone. “The market is now better prepared for disruptions than before, as we see more supply elsewhere.”
WTI for September delivery was at $107.50 a barrel in electronic trading on the New York Mercantile Exchange, up 17 cents as of 1:36 p.m. London time. The volume of all futures traded was 35 percent below the 100-day average. The contract ended yesterday’s session at $107.33, the highest close since Aug. 1. Prices have advanced 1.4 percent this week.
Brent for October settlement increased 35 cents to $109.95 a barrel on the London-based ICE Futures Europe exchange. The September contract expired yesterday after climbing 91 cents to $111.11, the highest since March 7. The front-month European benchmark crude was at a premium of $2.68 to WTI. The spread widened for a fourth day yesterday to $3.78.
The demonstrations in Cairo called by the Muslim Brotherhood were converging on Ramsis Square, while rallies started in the provinces of Alexandria and Gharbia, where police fired tear gas at protesters, footage broadcast by Al Jazeera television showed. The death toll from two days of violence is rising toward 600.
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.
Traffic through the canal hasn’t been affected by the unrest, Sheila Armstrong, a Galashiels, Scotland-based spokeswoman for port agent Inchcape Shipping Services, said by phone today.
Iraq plans to boost shipments in September compared with the previous two months, Asim Jihad, an oil ministry spokesman, said by phone from Baghdad. The country exported 2.324 million barrels a day of crude in July, he said Aug. 7.
The U.S. National Hurricane Center was tracking the weather system over Mexico’s Yucatan Peninsula.
Enbridge Inc. (ENB)’s Manta Ray offshore natural gas gathering company evacuated non-essential personnel from two platforms off the coast of Louisiana on Aug. 14 as the weather system crossed land. Marathon Oil Corp. (MRO) also cleared out some workers from its Ewing Bank facility in the Gulf of Mexico.
BP Plc (BP/) began removing non-essential personnel from four offshore platforms as drilling rigs contracted by the company halted operations. Production “remains online,” according to a statement on its website.
The Gulf is home to about 6 percent of U.S. natural gas output, 23 percent of oil production and more than 45 percent of refining capacity, according to the U.S. Energy Department.
WTI surged 8.8 percent in July, the most since August last year, as Egypt’s army deposed Mohamed Mursi as president. The Middle East accounted for 35 percent of global oil output in the first quarter, International Energy Agency data show.
Futures will probably decline next week on concern that the Federal Reserve will pare stimulus measures amid signs of economic growth, according to a Bloomberg News survey of analysts and traders.
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