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A prolonged political stand-off at Egypt had paralyzed the country and the businesses along the important trade route. But the Egyptian army’s intervention has softened the worries about blockage of movement of ..

04 Jul 2013

LONDON (Commodity Online): The removal of Egyptian president Mohamed Mursi by the military has impact on several fronts. While the development has eased the tension along the Suez canal, the fuel supplies from Middle East has helped crude oil prices to cool off from its sharp gains in two days.

A prolonged political stand-off at Egypt had paralyzed the country and the businesses along the important trade route. But the Egyptian army’s intervention has softened the worries about blockage of movement of shipments from Middle Eastern region along the Suez canal or a crude oil pipeline that runs through the country.

The Suez Canal carries over 2% of world’s total oil needs through it daily.

Oil prices fell on Thursday after the military coup in Egypt. The prices had surged by 3%-5% over the previous two days. The price of US crude had hit a 14-month high on Wednesday on concerns over political turmoil in Egypt, as well as rising US oil demand.

US light sweet crude fell two cents to below $101 a barrel, and Brent crude dropped 36 cents to $105.40.

Analysts believe that the crude oil prices would further soften as the tension along the Suez canal has eased. Also, US stock piles have further put pressure on the crude oil prices.

But the gap between the US and European oil benchmarks continued to narrow. ICE Brent for August was down 62 cents, or 0.59%, at $105.14.

Nymex for August was down 44 cents, or 0.43%, at $100.80--still trading above the $100 mark, having climbed above the symbolic level yesterday for the first time in 14 months.

The U.S. markets will be closed later for the Independence Day public holiday.

A Wall Street Journal report stated that U.S. benchmark West Texas International, or WTI, had a lot to do with the easing of the glut at the U.S. oil storage facility in Cushing that has kept prices depressed. When there is a lot of oil available, supply fears recede and the price remains low, but now oil is leaving the facility more quickly.

"Crude futures continued making headway over yesterday's trading session with ICE Brent gaining 1.69% [day on day] to settle at $105.76 per barrel while Nymex WTI settled above the $100 per barrel mark for the first time in 14 months," wrote analysts at JBC Markets.


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