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Supply concerns send oil prices soaring above $ 107 per barrel

NEW YORK: Brent crude oil prices were trading above $ 107 per barrel for the first time in three months yesterday, underpinned by political unrest in Egypt that continued to fuel concerns of oil supply disruptions in the Middle East.
US crude oil prices maintained a 14-month high, supported by data showing US employers added more jobs than expected in June, as other commodity prices sank.
The news pushed the US dollar to a near three-year high against a basket of currencies, which can lead to lower oil prices. Commodities priced in dollars become more expensive for holders of other currencies as the dollar strengthens.
But the crude oil market interpreted the data as a positive, said Matt Smith, commodity analyst at Schneider Electric in Louisville, Kentucky "because it means we're going to see a stronger economy."
Still, crude oil in other currencies is becoming more expensive and "will provide headwinds at some point," Smith added.
The positive data fueled investor fear that the US Federal Reserve may taper its stimulus program. That coupled with recent reports of weaker economic data out of China caused other commodities prices to collapse.
Gold lost 3 percent and copper was down more than 2 percent.
Brent crude oil for August delivery LCOc1 was last trading $ 1.80 per barrel higher at $ 107.34 by 11:52 a.m. EDT (1552 GMT) after hitting a high of $ 107.40 a barrel.
Front-month US crude oil futures CLc1 were up $1.63 per barrel to $ 102.87 a barrel after hitting a high of $ 102.92.
The Egyptian military took control of the nation on Wednesday. So far, ports and shipping through the Suez Canal have been operating normally, two shipping sources and a canal official said.
The Middle East pumps a third of the world's oil and the Suez Canal and Suez-Mediterranean pipeline were responsible for transiting some 2.2 million barrels per day of oil into the Mediterranean Sea in 2011, according to U.S. government data.
Libya's largest export terminal was shut late on Thursday. Port guards locked the gate over salary complaints, preventing workers from continuing operations.
Investors remained on edge and were pricing in risk of Mideast supply disruptions should conflict spread to other regional nations, analysts said.
The Egyptian uncertainty added to existing supply worries. Almost all physical crude grades consumed by Europe are now short including Russian, Iraqi, Libyan and African grades.
North Sea supplies, which underpin the Brent contract, are expected to be extremely low in the coming months when main grade Forties output is reduced due to maintenance in August.
The spread between the Brent oil contracts of August and September LCOQ3-U3 widened to 79 cents, the highest in nearly five months.
Strong employment figures from the United States underpinned futures but support from the data could be short lived.
US job growth increased more than expected in June, which could draw the Federal Reserve closer to scaling back its massive monetary stimulus later this year, which would sap liquidity and drag on commodity prices.
Employers added 195,000 new jobs to their payrolls last month, the Labor Department said yesterday, while the unemployment rate held steady at 7.6 percent as more people entered the work force.
The closely watched spread between global benchmark Brent crude oil and US West Texas Intermediate CL- had widened to $ 5.17 per barrel and was last trading around $ 4.50.
Brent's premium to WTI crude at one point on Wednesday narrowed to $3.09, the weakest since December 2010.

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