Oil up amid Egypt concerns

2011-02-02 09:49

Singapore - Oil rose in Asian trade on Wednesday, with Brent crude within a whisker of breaching $102 a barrel again as the unrest in Egypt continued to weigh down investor mood, analysts said.

New York's main contract, light sweet crude for March delivery gained 2c to $90.79 and Brent North Sea crude, also for delivery in March, advanced 25c to $101.99.

The turmoil in Egypt fuelled Brent crude price to an intraday high of $102.08 on Tuesday, its highest level since late September 2008 after the Lehman Brothers bankruptcy sent financial markets into a tailspin.

Egypt is not a major crude producer but the country is home to the crucial Suez Canal, which carries about 2.4 million barrels of oil a day - roughly equivalent to the daily output of Iraq or Brazil.

"Concern over the situation deteriorating in Egypt is easing... However, (the situation in Egypt) will still be a background factor affecting oil prices at the moment," said Yu Yingxi, a commodities analyst for Barclays Capital in Singapore.

More than one million people took part in anti-government demonstrations across Egypt on Tuesday, the eighth day of protests aimed at ousting President Hosni Mubarak.

The angry revolt - in which an estimated 300 people have died and more than 3 000 been injured - has sent jitters throughout the Middle East.

Investors are concerned that similar demonstrations - which have also touched Tunisia, Yemen and Jordan - could spread elsewhere in the oil-rich region.

"After the unrest in Tunisia and Egypt, there is still a high risk of the troubles spreading to neighbouring countries, including major North African oil producers Libya and Algeria," said Commerzbank analyst Carsten Fritsch.

"Although the turmoil has not affected oil shipments so far, the geopolitical 'risk premium' is more likely to increase further."