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U.S. oil falls to 10-week low as Mubarak steps down - ASHARQ AL-AWSAT English Archive
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NEW YORK, (Reuters) – U.S. oil prices fell to a 10-week low on Friday after Egyptian President Hosni Mubarak stepped down and handed over power to the army.

Mubarak’s departure came after 18 days of mass protests that had raised concern about potential for supply disruptions and a spread of the turmoil to major oil producers in the region and had helped push ICE Brent crude futures above $100 a barrel for the first time since 2008.

Front-month ICE Brent crude for March delivery expired on Friday, holding on to some gains after the Mubarak departure, but Brent contracts for nearby months were lower.

Brent’s premium to U.S. crude reached a record $16.24 a barrel as U.S. prices fell sharply on the Egyptian developments. But the spread between April contracts was only around $12 a barrel.

U.S. crude futures for March delivery fell $1.15 to settle at $85.58 a barrel, the lowest close in 10 weeks and off 3.89 percent on the week, the biggest weekly percentage loss since the week to November 19.

Expiring March ICE Brent crude rose 56 cents to settle at $101.43 a barrel, off its $102.03 intraday peak. The more actively traded April contract fell 50 cents to settle at $100.94 a barrel.

Egypt’s change of power ended 30 years of one-man rule by Mubarak, sparking jubilation on the streets and providing a cautionary tale to other regimes in the Arab world and beyond.

Analysts and brokers remained cautious about the implications of Egypt’s political transition for the broader region, where protesters also have called for changes in Jordan and Yemen.

“Crude futures have fallen back on the news of Mubarak stepping down. But lower prices may be temporary here as traders will again look broadly and see if protests in Egypt … may spark other similar movements across the Middle East,” said Mark Waggoner, president at Excel Futures in Bend, Oregon.

Money managers increased their net long crude futures positions on the New York Mercantile Exchange in the week to Tuesday, as Egypt’s protests raged, according to a Commodity Futures Trading Commission report released late on Friday.

In addition to the unrest in the region, OPEC producers have been subject to calls to boost production on concerns that oil prices above $100 a barrel will stifle the global economic recovery. But, so far, OPEC officials have resisted calls for an emergency meeting to address high prices and output targets.

Monthly reports from both the International Energy Agency and OPEC this week showed higher production from the OPEC nations, but they expected global demand to keep rising.

OPTIMISM ABOUT THE ECONOMY

U.S. consumer sentiment rose to its highest level in eight months in early February, according to the Thomson Reuters/University of Michigan Surveys of Consumers and in a separate survey, the U.S. economy and jobs market were seen growing more strongly in the first quarter than previously expected.

U.S. stocks rose as Egypt’s clearer political picture lifted investor sentiment.

The dollar’s strength had helped limit crude price gains ahead of the Mubarak news and the greenback shook off a brief dip after the news and was boosted by the supportive economic news, including Thursday’s report of a fall in initial jobless claims last week.

A stronger dollar can curb dollar-denominated oil prices because consumers using other currencies must pay more for the commodity and the value of dollars paid to producers is higher.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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