Tuesday, Feb 01, 2011


 
   By Dan Strumpf 
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Crude oil prices lost momentum Tuesday as fears over oil supply disruptions at the Suez Canal eased, but attention remained fixed on events in Egypt, where massive antigovernment protests continued for another day.

Light, sweet crude for March delivery fell 7 cents, or 0.1%, at $92.12 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures, holding above $100 a barrel, rose 9 cents, or 0.1%, at $101.10 a barrel.

Despite port closures in Egypt, the Suez Canal, a key energy transit point, remained open to shipping Tuesday. Although massive protests continued to wrack the world's largest Arab country Tuesday, significant disruptions to oil flows appear to be looking less likely, analysts said.

"There isn't really any disruption to note yet," said Gene McGillian, broker and analyst at Tradition Energy. "There are still protests going on in Egypt, but the shipping through the canal appears to be continuing normally."

Egypt isn't a major oil supplier, but the Suez Canal and the nearby Sumed pipeline are key chokepoints for global oil supplies. In addition, fears persist that the antigovernment protests could spread to major oil producing countries elsewhere in the region.

However, even if oil flows through the Suez were disrupted, shippers could easily reroute supplies bound for Europe around southern Africa "without too much of a headache," analysts at JBC Energy said in a research report. Moreover, the Organization of Petroleum Exporting Countries has indicated it would raise production in the event of a supply disruption.

The turmoil in Egypt propelled crude prices to fresh two-year highs on Monday, and triple-digit oil prices made headlines for the first time in more than two years after Brent crude surpassed $100 a barrel. The contract held above $100 Monday, although the Egypt crisis has allowed Nymex crude to catch up, helping to narrow Brent's premium to West Texas Intermediate to $9 from more than $12 last week.

Oil prices could retreat even further this week if the U.S. government reports a large build in crude stockpiles. The Department of Energy is due to release its weekly oil and fuel inventory estimates at 10:30 a.m. EST Wednesday, and analysts widely expect an increase in inventory levels. The American Petroleum Institute, an industry group, will report its own estimates at 4:30 p.m. EST Tuesday.

The DOE is expected to report a 2.6-million-barrel increase in oil stocks, according to analysts surveyed by Dow Jones Newswires. Gasoline inventories are seen rising by 2.2 million barrels. Stockpiles of distillates, including heating oil and diesel, are expected to fall 1.4 million barrels, while refinery runs are seen falling 0.4 percentage point to 81.4% of capacity.

Front-month March reformulated gasoline blendstock, or RBOB, recently rose 1.12 cents, or 0.4%, at $2.5113 a gallon. March heating oil gained 1.35 cents, or 0.5%, at $2.7538 a gallon.

-By Dan Strumpf, Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com.

(END) Dow Jones Newswires

February 01, 2011 09:56 ET (14:56 GMT)