Egypt unrest pushes light crude oil over $100 a barrel
Egypt unrest pushes the price of oil to a 14-month high
(about 17 hours later)
The price of US light crude oil has risen above $100 a barrel for the first time since September 2012 on concerns over political turmoil in Egypt.
The price of US light crude oil hit a 14-month high on Wednesday to over $100 a barrel on concerns over political turmoil in Egypt.
US light crude rose more than 2% to $101.80 a barrel in Asia trade. Brent crude also rose 1% to 105.20 a barrel.
The benchmark US crude rose $1.64 to $101.2 a barrel, its highest since May 2012, while Brent crude rose 1.76% to 105.76 a barrel.
Egypt's President Mohammed Morsi has rejected an army ultimatum to resolve the turmoil by Wednesday, triggering concerns that the crisis may escalate.
As well Middle East worries, rising US demand for oil also boosted prices.
There are fears this may hurt oil supplies through the Suez Canal.
The US Energy Department said that weekly US crude supplies fell by 10.3 million barrels.
"The turmoil in Egypt has caused the market to inject some premium into oil futures," Victor Shum, a vice president at IHS Energy Insights, told the BBC.
That was the biggest fall in 13 years and was more than three times the drop that had been expected.
Growing concerns
It was partly due to a temporary reduction in supplies from Canada as well as increased demand from a refinery in Indiana that had just restarted work.
Over recent days, thousands of protesters have gathered in Tahrir Square in central Cairo to demand that Mr Morsi step down.
Flows
Meanwhile, supporters of Mr Morsi have held their own demonstrations backing the president.
Traders also worried that the volatile political situation in Egypt could interrupt oil flows through the Suez Canal and the wider Middle East, which account for around 25% of the world's oil output.
At least 16 people died at one pro-Morsi rally on Tuesday night.
The Egyptian president, Mohammed Morsi, is facing protests from millions of protesters, and the Egyptian military is threatening to disband parliament and put in place a new leadership.
On Monday, Egypt's army had warned that it would step in unless a solution were found, giving Mr Morsi 48 hours to find agreement with the opposition.
The Suez Canal sees just over 2% of world oil needs pass through it daily.
The army's ultimatum expires around 16:30 (15:30 BST) on Wednesday.
The Suez Canal Authority, which operates the waterway, said it "has all the authorities needed for running the Canal without being limited by the laws and the systems of the [Egyptian] government".
However, Mr Morsi has insisted he remains the country's legitimate president.
The rises came despite economic signals from China earlier on Wednesday which suggested construction activity in the country was slowing down - the latest sign of weakening growth - and weakening growth in demand for raw materials - from the country.
Analysts said that markets had been worried about the developments in Egypt and there were concerns that the protests may spread.
"There is a real concern in the oil market about the situation in Egypt, and whether the unrest could spread to the rest of the Middle East," said Michael McCarthy, chief market strategist at CMC Markets.
"In fact, it's not just Egypt, dealers are closely watching the situation in Libya and Syria as well," he added.
Temporary spike?
However, some analysts believed the jump in prices was likely to be temporary, saying that global economic growth had been slowing and, as a result, demand for oil was likely to remain low.
"There is more than enough crude supply and there is relatively weak demand," said Tony Regan, principal consultant at oil and gas consultancy Tri-Zen.
Mr Regan noted that the US, one of the biggest consumers of oil, had also been reducing its reliance on Middle Eastern oil - a move that should see prices ease.
David Lennox, a resources analyst with Fat Prophets added that, given the global demand and supply situation, "the price should not be at the current levels".
He said that US light crude should realistically be trading between $90 and $95 a barrel.
"If the Egypt crisis does not escalate into something bigger then prices are likely to fall to that level," he said.
Mr Lennox said that the upcoming 4 July holiday in the US, which traditionally sees increased demand for oil due to more people travelling by road, had also impacted the prices.
