FX.co ★ Oil review for 31/01/2011

On Monday oil prices hit a 2-year high. The cost of Brent contracts ran over USD 100 per barrel. It was also pushed up by concerns over present disorders in Egypt.
At closing the trades on NYMEX March futures on low-sulfur oil rose by USD 2.85 (3%) up to USD 92.19 per barrel. ICE Brent futures grew by USD 1.59 (1.6%) up to USD 101.01 per barrel which is the highest closing price registered since September 26, 2008. Brent oil futures were the first large-scale contract that has exceeded a threshold of USD 100 per barrel for over two years.
Prices for crude NYMEX oil increased by 7.6% during the last two trading sessions amid the disturbances in Egypt. On Friday a record volume of trades carried out was fixed on NYMEX. Even though Egypt is not considered to be a large oil supplier, the disorders gave rise to concerns regarding possible malfunctions of the Suez Canal, a key waterway for energy transportation. There are also fears that the disturbances are probable to spread to important oil producing countries of the region. On Monday the Suez Canal Authority announced that the canal was properly functioning. However, shipowners are getting prepared for delays.
OPEC representatives said on Monday that in case the crisis in Egypt exacerbates oil delivery is possible to be disrupted. The OPEC announced its readiness to extract more oil if there are any disruptions. It is should be mentioned that Egypt is not an OPEC member. According to analysts, Suez Canal is not likely to be closed. Any disorders in its functioning will cause delays in deliveries, which will be redirected through the South African coast.
Later this week market observers will switch their attention to the US Department of Energy’s data concerning oil and oil products supply due on Wednesday. It is forecasted that during January 22-28 oil supply increased 2.6 mln barrel, gasoline supply grew 2.2 mln barrel, and supplies of distillate fuel, a category that includes heating oil and diesel, fell 1.4 mln barrel. Oil refinery capacity utilization declined 0.4 percent point to 81.4% according to the forecast.