Oil hovered above $ 100 on Tuesday as the market assessed the risk of social unrest in Egypt spread to neighboring OPEC members, but remained below the previous high of $ 101 on a lower growth in China factory. Analysts and traders agreed that the popular uprising against the Egyptian government was likely to tanker traffic and oil flows through the strategic Suez Canal and assume pipeline disturbance, but said the unrest in the region will vote to support the prices.
“Even if the worst case scenario of a complete stoppage of traffic on the crucial link materializes, the total surplus in shipping capaciteit a switch to longer-term travel around South Africa without much of a headache to allow “JBC Energy said in a research note.
“However, there seems a big risk that events could spread to other countries in the region,” the report said.
The unrest in Egypt comes on the heels of a revolt in Tunisia overthrown and the country president keeps global investors and traders looking for signs of copycat unrest in neighboring Algeria OPEC producer.
Brent crude for March LCOc1 slipped 48 cents to $ 100.54 per barrel as of 1006 GMT, after topping $ 100 for the first time since October 2008 on Monday, when prices an intraday high of $ 101.73 touched. U.S. crude CLc1 shed 10 cents to $ 92.09.
The International Energy Agency said Tuesday that the oil market do not necessarily face, but called on OPEC to remain “flexible” in the event that contamination is not spreading and deficits begin to show.
But many traders said that perceived risk, while not supported by any evidence of a direct threat to ships passing through the strategic Suez Canal links the Red Sea to the Mediterranean, could lead to a further increase.
“$ 100 is not a goal for Brent,” said Tetsu Emori, a fund manager at Tokyo-based Astmax Co. Ltd.
“$ 110 and $ 115 could be achieved at the end of the year. People must now take into geopolitics. Even if nothing happens in Egypt, allow investors to take on additional risk and develop long positions in the hope of making more money. ”
Egyptian anti-government protesters, sensing victory after President Hosni Mubarak agreed to discuss major political reform, rally support for what they hope one million-strong march for democracy on Tuesday.
source:reuters
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