SAN FRANCISCO (MarketWatch) — Oil futures settle
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SAN FRANCISCO (MarketWatch) — Oil futures settled above $101 a barrel Wednesday, as concerns about the Middle East oil trade intensified in the wake of political turmoil in Egypt and after a U.S. report showed a much bigger-than-expected drop in last week’s crude supplies.
Crude for August delivery CLQ3 -0.19% settled at $101.24 a barrel on the New York Mercantile Exchange, up $1.64, or 1.7%. It touched highs above $102.
Tracking the most-active contracts, futures prices marked their highest settlement and first close above the key $100 level since May 2012.
Prices put on their own “fireworks show a day ahead of the July 4th holiday,” said Alan Herbst, a principal at Utilis Advisory Group. Regular Nymex trading will resume on Friday after Thursday’s U.S. Independence Day holiday.
On Tuesday, oil prices closed at $99.60, which was also their highest since May of last year.
Egypt protests lifts oil prices
Paul Vigna and Jerry DiColo discuss how events in Egypt are affecting oil prices.
Egyptian President Mohammed Morsi had rejected calls for his resignation — a year into his term as the country’s first democratically elected president.
Late Wednesday in Cairo, shortly after Nymex oil trading closed, the Egyptian military announced on state TV that it had ousted Morsi as president and suspended the constitution.
“Though Egypt itself is not a major oil producer, its geographic positioning (i.e. the Suez Canal) gives it control over some of the world’s most important oil routes,” said Jonathan Citrin, founder and executive chairman at investment firm CitrinGroup, ahead of Morsi’s ousting.
“Until the situation in Egypt calms with a clear outlook for energy transportation routes, expect oil prices to be quite volatile with an upside tilt,” he said.
In addition to Egypt, the ongoing civil war in Syria remains a point of concern among energy traders because of Syria’s proximity to oil-rich Iraq.
Meanwhile, oil maintained its rise early Wednesday after Automatic Data Processing said the economy gained 188,000 jobs in June, topping forecasts for a rise of 160,000. The Labor Department said jobless claims fell to 343,000 last week, slightly less than expected.
“The ADP numbers were encouraging on the construction side, but the manufacturing sector job growth seemed to reflect a weaker profile in this externally sensitive sector,” said Richard Hastings, a macro strategist at Global Hunter Securities.
Prices for the August futures contract for Brent crude UK:LCOQ3 +1.82% also jumped. Brent rose $1.76, or 1.7%, to $105.76 a barrel on ICE Futures.
But UBS on Wednesday cut its long-term outlook on Brent crude, citing bearish fundamentals that support $92 a barrel in 2016, not $95, as previously projected.
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