The price of oil advanced past US$98 a barrel Tuesday, underpinned by political unrest in Egypt that raised fears of disruption to global crude supplies.
By early afternoon in Europe, benchmark West Texas Intermediate crude for August delivery was up 37 cents at US$98.36 a barrel in electronic trading on the New York Mercantile Exchange. The contract had jumped $1.43 to close at US$97.99 on Monday.
After massive weekend protests in Egypt that continued Monday, the country’s military issued an ultimatum to President Mohammed Morsi that gave him 48 hours to meet the demands of the millions who have taken to the streets seeking his ouster.
The ultimatum, rebuffed by Morsi, raised worries on both sides that the military could take over, as it did after the 2011 ouster of autocrat Hosni Mubarak. It also raised the risk of a backlash from Morsi’s Islamist backers, including his powerful Muslim Brotherhood and hardliners, some of whom once belonged to armed militant groups.
Traders were concerned that the protests in Egypt and the civil war in Syria could affect the production and transport of oil supplies in the Middle East and North Africa.
“It is above all the risks to supply that are lending support to oil prices,” said a report from Commerzbank in Frankfurt. “The situation in Egypt is threatening to escalate further. Although Egypt is not an oil exporter, the Suez Canal and a number of pipelines do make it an important transit route for oil from North Africa and the Gulf region.”
Falling oil production in Libya and Nigeria was also seen supporting prices.
Later in the day Tuesday, investors will be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending June 28 is expected to show a draw of three million barrels in crude oil stocks and a build of one million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the U.S. Energy Department’s Energy Information Administration — the market benchmark — will be out on Wednesday.
In London, Brent crude was up 26 cents at US$103.26 a barrel on the ICE Futures exchange.
In other energy futures trading on Nymex, natural gas gained 5.2 cents to US$3.629 per 1,000 cubic feet, heating oil added 0.81 of a cent to US$2.8817 a U.S. gallon (3.70 litres) and wholesale gasoline rose 2.35 cents to US$2.7614 a gallon.