Brent oil price tops $108 as crude sails higher on Egypt tensions

Brent crude oil futures continues to defy a stronger dollar on Wednesday as oil prices sailed higher, propped up by tensions surrounding Egypt’s Muslim Brotherhood who have rejected a timetable for new elections in the country which could see further unrest play out.

Latest Brent Oil Price

In London, Brent crude oil futures for August 2013 delivery was trading at $108.11, 10:47 GMT this morning on the ICE Futures Exchange. Meanwhile, US Light crude oil futures traded above $104 a barrel and the spread between global benchmark Brent crude oil and the US benchmark WTI narrowed by 89 cents to under $4.00 a barrel.

“WTI was a lot less attractive before being in contango versus Brent being in backwardation, and was out of favour, as an investment compared with Brent, but now investors are coming back in,” said Tony Nunan, a risk manager at Mitsubishi Corp.

Trouble in Egypt

A decree issued late on Monday, laid out plans to set up an Egyptian panel to amend the suspended Islamist drafted constitution within 15 days. The changes would then be put to a referendum, to be organised within four months which would pave the way for parliamentary elections, possibly in early 2014. Egypt’s Muslim Brotherhood has rejected the move, saying it is illegitimate.

Egypt, which sits astride the Suez Canal through which much of Middle East crude passes, continued to be the main worry of traders, analysts said.

“Egypt pretty much remains in focus and traders seem to have priced in a further escalation of the current unrest,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

Suez Canal – Emergency Measures

Egypt’s army announced a state of emergency in the provinces of Suez and South Sinai last Friday which has helped oil prices rise to their biggest weekly gain since last summer. So far, ports and shipping through the Suez Canal have been unaffected, local Egyptian shipping agents have confirmed.

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Brent oil price tops $108 as crude sails higher on Egypt tensions