Oil Rises on Expectations of Egypt Regime Change

Oil prices rose Thursday on expectations that Egypt's president will step down, easing worries that oil shipments from the Middle East could be disrupted by ongoing protests.

Benchmark West Texas Intermediate crude rose 29 cents to $87 per barrel in midday trading on the New York Mercantile Exchange. Prices climbed as high as $88.28 earlier in the session. In London, Brent crude fell 63 cents to $101.69 a barrel on the ICE Futures exchange.

Egypt's military announced on national television that it stepped in to "safeguard the country" and assured protesters that President Hosni Mubarak will meet their demands. The chief demand is that Mubarek leave office. In Washington, the CIA chief said there was a "strong likelihood" Mubarak will step down Thursday.

BNP Paribas Commodity Futures analyst Tom Bentz said that traders hope there is less chance of disruptions to oil supplies passing through the Suez Canal. He also said some uncertainty remains because a number of issues have to be sorted out, including who would succeed Mubarek.

Egypt controls the Suez Canal and a nearby pipeline that together bring about 2 million barrels of day from the Middle East to customers in Europe and America. That's a relatively small amount compared with the 87 million barrels consumed worldwide every day.

Oil prices also got a boost on Thursday from the Paris-based International Energy Agency, which said global consumption should increase in 2011, exceeding 90 million barrels a day for the first time by the last quarter of the year.

"With the global economy recovering, we've seen a recovery in demand as well, but supply has been more abundant than demand," Bentz said.

The Energy Department said Thursday that the nation's natural gas supplies fell more than analysts expected last week, shrinking by 209 billion cubic feet to 2.144 trillion cubic feet. Supplies have been dropping as homeowners turned up thermostats and utilities burned more gas to produce electricity, but not enough to drive up prices. Natural gas for March delivery fell 3 cents to $4.013 per 1,000 cubic feet on the Nymex. It briefly fell below $4 for the first time since mid-November, when the heating season was just starting for most of the country.

Meanwhile, the national average for a gallon of regular gasoline was $3.119 Thursday, according to AAA, Wright Express and the Oil Price Information Service. That's 3 cents more than a month ago and 47.8 cents more than a year ago.

In other Nymex trading in March contracts, heating oil fell 6 cents to $2.7115 a gallon and gasoline fell 6 cents to $2.4700 a gallon.

———

Alex Kennedy in Singapore and Pablo Gorondi in Hungary contributed to this report.