Oil Futures Settle Above $100 a Barrel on Egypt, Stockpiles

--Nymex crude up $1.64 at $101.24/barrel
--Tensions in Egypt raise investors' concerns
--U.S. oil stockpiles fell 10.3 million barrels last week, the EIA said

 
  By Sarah Jacob and Dan Strumpf 
 

NEW YORK--U.S. oil prices settled above $100 a barrel Wednesday for the first time in more than a year, following political uncertainty in Egypt and a sharp fall in domestic stockpiles.
Light, sweet crude for August delivery rose $1.64, or 1.7%, to $101.24 a barrel on the New York Mercantile Exchange, the highest settlement since May 3, 2012. ICE North Sea Brent crude oil for August delivery was recently $1.79 higher at $105.79 a barrel.
"Crude oil got its first boost from fears of the spread of unrest in Egypt. It got its second boost from the friendly weekly inventory report...It caught people a little bit off guard," said Phyllis Nystrom, energy analyst at CHS Hedging.

The amount of oil in storage in the U.S. fell by 10.3 million barrels to 383.8 million barrels for the week ended June 28, the U.S. Energy Information Administration said. It was the biggest weekly drop in U.S. stockpiles since the week ended Dec. 28 and was more than the 2.3-million-barrel decline analysts had expected.

Stockpiles in the Gulf Coast region saw the biggest drain, down 3.2% from the previous week.
"We've got the refining industry really back up and running, turning this crude-oil surplus that we've seen back into refined products," said Andy Lipow, president of Houston consulting firm Lipow Oil Associates. "We're in the peak summer driving season, so [demand] is going to be at the highest level we've seen this year."
Refineries turn crude oil into gasoline and other products. They ramp up production at this time of year to prepare for increased demand as Americans travel during the summer. Refineries were running at 92.2% capacity last week, up from 90.2% the previous week.
Analysts also said stockpiles were lower because of supply disruptions in Canada, curbing imports. Pipeline operator Enbridge Inc. (ENB) shut down three oil pipelines in Canada last week after detecting a leak in one.
Oil prices also got a boost from political tensions in Egypt that increased concerns about supplies from the Middle East.
"All eyes are on Egypt. There is fear of more instability in an already unstable region," said Andy Lebow, senior vice president of energy futures at Jefferies Bache.
Egyptians have taken to the streets in recent days to participate in mass demonstrations demanding the resignation of President Mohammed Morsi. A deadline set by the Egyptian army for Mr. Morsi to resign expired Wednesday. Mr. Morsi refused to step down and proposed a consensus government as a way out of the country's crisis.
Although Egypt isn't a major crude producer, its control of the Suez Canal and its proximity to large oil exporters such as Saudi Arabia make investors uneasy whenever there is political unrest in the country.
Front-month August reformulated gasoline blendstock, or RBOB, settled 5.49 cents higher at $ 2.8382 a gallon. August heating oil settled 4.98 cents higher at $2.9512 a gallon.
More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:

   Nymex Light Crude Oil Close 
   Nymex Harbor RBOB Gasoline Close 
   Nymex Heating Oil Close 
   ICE Brent Crude Oil Close 
   ICE Gas Oil Close 

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