Singapore, Reuters—Brent crude futures rose above USD 108 to the highest in more than three months on Monday, extending last week’s gains as tensions in Egypt stoked concerns about global oil supplies.
At least 15 people were killed on Monday in Cairo, medical sources said, when the Muslim Brotherhood said shots were fired at supporters of deposed President Mohamed Mursi near the military building where he is being held.
Any conflict in the Middle East raises worries of disruption to major oil-producing areas or oil shipments. So far, ports and shipping through the Suez Canal—through which a major portion of the world’s oil is shipped—have been operating normally, two shipping sources and a canal official said.
“What’s underpinning the strength in the oil market is the tensions out of the Middle East,” said Ben Le Brun, an analyst at OptionsXpress in Sydney. “There’s been some cause for concern and that’s going to continue to put a floor under oil prices.”
Brent crude futures gained 24 cents to USD 107.96 a barrel by 0556 GMT, after hitting USD 108.04—the highest since April—earlier in the session.
US crude increased by 15 cents to USD 103.37 a barrel, after earlier touching a fresh 14-month high of USD 104.12.
Oil prices were also supported by a US jobs data report on Friday that came in better than expected, signalling that growth in the world’s largest oil consumer is gathering momentum.
US employers added 195,000 new jobs to their payrolls last month, beating expectations of 165,000. The figures for April and May were also revised up by a combined 70,000.
But the data also cemented expectations that the US Federal Reserve could start winding down its massive stimulus programme as early as September.
That pushed the US dollar to a three-year high against a basket of currencies and dragged on commodities. A strong dollar makes commodities priced in the US unit more expensive for holders of other currencies, typically pushing down prices.
“If we get some sort of resolution to the Middle East crisis then I think (a stronger US dollar) is going to have a downward impact on oil,” Le Brun said.
Also supporting prices, supply of the North Sea crude oil that underpins the benchmark Brent contract is set to fall by more than 11 percent next month due to maintenance.
“Oil prices should be supported by tighter supplies. US inventories tend to decline in the third quarter, while Brent loading programs show output of 754,000 barrels-per-day in August, down from 851,000 bpd in July,” ANZ analysts wrote in a note on Monday.
Meanwhile, an agreement has been reached with security guards who had shut down two oil ports in eastern Libya, allowing exports to resume, an official said on Sunday, easing some of the supply concerns.
Investors are also keeping an eye on Europe as the euro zone must decide on Monday how to keep Greece on a lifeline. Europe remains divided over whether to delay aid payments to Athens in an attempt to force through reforms ranging from sacking public workers to selling state assets.