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Saturday, February 12, 2011

Oil prices dropped on Friday after Egypt's President Hosni Mubarak leaves Cairo

Oil prices dropped on Friday after Egypt's President Hosni Mubarak leaves Cairo : Oil prices dropped on Friday after Egypt's President Hosni Mubarak handed over power to the military and left Cairo.

Benchmark crude for March delivery fell $1.15 to $85.58 on the New York Mercantile Exchange. Traders and investors have been concerned that anti-government protests in Egypt over the past 18 days could spread to other parts of the Middle East and disrupt oil supplies. Now that Mubarak has stepped down, the military says it will oversee a democratic transition to a new government.

Crude-oil supplies increased 1.9 million barrels to 345.1 million last week, according to an Energy Department report on Feb. 9. It was the fourth straight weekly gain. Gasoline stockpiles advanced 4.66 million barrels to 240.9 million in the week ended Feb. 4, the highest level since March 1990, the report showed.

"Inventories are high and may rise further, while geopolitical tensions in the Middle East are approaching a relatively peaceful resolution with minimal contagion impact on key crude-oil producing countries in the region," said Jason Schenker, president of Prestige Economics, an energy advisory firm in Austin, Texas.

Crude prices in New York had surged to $92.19 on Jan. 31, the highest settlement since Oct. 3, 2008, on concern Egyptian unrest would disrupt shipments from the Middle East.

Closer to home, U.S gasoline prices are the highest ever for this time of year. Since Jan. 1, pump prices have averaged well above $3 per gallon. They stood at $3.12 per gallon Friday, 4 cents higher than the same time last month and 51 cents more than a year ago, according to data from the Oil Price Information Service (OPIS).

Friday's average price for a gallon of gas in Southwest Ohio was $3.06, down from the 2011 high of $3.16 set on Feb. 4.

The average price in Northern Kentucky on Friday was $3.17, the OPIS data showed. That's a penny less than a week ago and three cents lower than the $3.20 on Feb. 5.

The dramatic jump brings back memories of three years ago, when pump prices rose above $4 a gallon, forcing many drivers to join car pools and trade in gas-guzzling SUVs for more fuel-efficient cars. But "it would be a mistake to think we're going to have that all over again," OPIS chief oil analyst Tom Kloza said.

Gasoline prices have climbed this year for a number of reasons; including a rise in oil demand from China, a frigid winter and tensions in Egypt. Crude demand will slide in the U.S. by May, as U.S. refineries slow down fuel production to purge stocks of winter fuels as they switch to summer blends, he said.

Kloza said the biggest difference between now and 2008 is that oil traders are much more cautious. After rising above $147 per barrel three years ago, oil prices tumbled to below $33 per barrel in 2009. The market remembers that, he said, and even the most bullish traders no longer think they can chase commodity prices ever higher without any risk.

Oil may fall next week as U.S. crude and fuel stockpiles climb and on speculation unrest in Egypt will subside, reducing the risk of a supply disruption, a Bloomberg News survey showed made before Mubarak stepped down.

Twenty of 42 analysts, or 48 percent, forecast crude oil will drop through Feb. 18. Twelve respondents, or 29 percent, predicted prices will climb. For the latest updates PRESS CTR + D or visit Stock Market news Today

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