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Thursday, February 3, 2011

World oil prices extend gains in Asian trade

World oil prices extend gains in Asian trade SINGAPORE: World oil prices extended gains in Asian trade Thursday, with the unfolding political crisis in Egypt keeping the market jittery over fears about a wider fallout in the Middle East.

The standoff escalated into violence Wednesday after supporters of Egyptian President Hosni Mubarak clashed with protesters demanding the veteran leader's ouster in running battles that left hundreds injured

New York's main futures contract, light sweet crude for March, climbed 47 cents to $91.24 in Asian morning trade.

Brent North Sea crude for March was up 22 cents to $102.56.

"The unfolding of the situation in Egypt has injected a burst of volatility and uncertainty into oil markets," Barclays Capital analysts said in a client note.

While Egypt is not a major crude producer, the country is home to the Suez Canal, which carries about 2.4 million barrels daily, roughly equal to Iraq's output.

Since the outbreak of unrest in Egypt more than a week ago, oil prices have risen on fears of disruption to the artificial waterway that links the Mediterranean Sea and the Red Sea.

"The situation introduces risks and uncertainties that are likely to be highly significant in terms of the broader political evolution of the region," analysts at Barclays Capital said.

Phil Flynn at PFGBest described the situation as "an uneasy calm."

"Oil shipments through the Suez Canal have not been impacted but tanker rates may still rise," he said.

Oil prices were climbing despite data showing weak demand in the United States, the world's biggest oil consumer.

The US government's latest weekly stockpiles report showed supplies were still growing.

US crude oil reserves increased sharply for the third week in a row, the US Department of Energy said. Crude oil stocks rose 2.6 million barrels to 343.2 million in the week ending January 28, in line with expectations.

At the almost-full depot at Cushing, Oklahoma, reserves rose by 600,000 barrels to 38.3 million.


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