Crude At Highest In 14 Months Above $101 On Egypt Turmoil; Stockpiles

Crude oil surged to the highest since September 2012 as the rising political turmoil in Egypt raises concerns about the stability of the region and may disrupt oil supplies, while a US report showed that crude stockpiles shrank the most this year amid rising demand.

In Egypt President Mohamed Mursi rejected the 48 ultimatum given to him by the army to solve the country’s political impasse, saying he refuses to resign and that he will face of mass protests seeking his ouster; 16 people died in Cairo clashed Tuesday.

While the military might be preparing to suspend Egypt’s constitution and cripple Mursi’s authority, his Islamist supporters vowed to stand firm against the threat of a military coup, adding to the turmoil in the country.

Egypt controls the Suez Canal and the Suez-Mediterranean Pipeline, through which 2.24 million barrels a day of oil was shipped to Europe and North America; the Middle East accounted for 33% of global crude output in 2012.

- Crude is trading around $101.28 a barrel after rising $1.68

- Brent is trading around $104.86 a barrel after rising $0.86

Further support was given by the American Petroleum Institute report which showed US crude inventories fell by 9.4 million barrels last week, the most this year, while the Energy Information Administration report today might show crude stockpiles fell by 2.25 million.

Investors are awaiting data on US jobless claims and non-farm payrolls later this week to gauge the prospects for the US Federal Reserve to cut stimulus. Today the ADP report might show that American companies added 160,000 jobs in June.

President of the Federal Reserve Bank of New York, William Dudley, reiterated in a speech yesterday that while growth will probably quicken in 2014, the Fed may prolong bond purchases if the labor market grows below the central bank’s expectations.

- Natural gas is trading at $3.646 per cubic feet after falling 0.22%

- Gasoline is trading at $2.8031 a gallon after rising 0.71%

- Heating oil is trading at $2.9237 a gallon after rising 0.77%