Brent crude back over $100, record premium to U.S. oil

Thursday, 10 February 2011 01:24 -     - {{hitsCtrl.values.hits}}

Reuters) - Brent crude oil rose back over $100 on Wednesday, after data a day earlier showed a drop in U.S. stockpiles and supported by the unrest in Egypt.

Analysts said the rise was likely to be capped by China’s rate hike on Tuesday and ahead of the release of U.S. government weekly oil data Wednesday, which may record high crude stockpiles at the delivery point for U.S. crude.

Brent traded 65 cents higher at $100.57, after closing at $99.92 on Tuesday. U.S. crude futures rose 40 cents to $87.34 by 1210 GMT.

Brent crude traded at a record high premium of $13.39 a barrel to U.S. crude.

“Brent is still reflecting the market concern about Egypt and the Suez Canal,” said Tony Nunan, assistant general manager with Mitsubishi Corp in Tokyo. “Oil supply to Europe via the canal would have more impact than to the U.S.”

The canal was operating normally on Tuesday despite strike action by 3,000 workers in companies owned by the Suez Canal authorities in Ismailia and Suez over pay and conditions.

Olivier Jakob with Petromatrix said weekly data from the industry group American Petroleum Institute (API), which showed a surprise decline in U.S. crude inventories on Tuesday, was pushing oil prices higher.

Analysts with Mizuho Corporate Bank said a rise in oil prices was likely to be limited by the long-term impact on oil demand from China’s two rate hikes in a month.

“Caution about a slowdown in demand in China due to the rate hikes is strong. It is difficult to see development, where the oil market would keep on targeting higher prices aggressively,” the bank said in its daily note.

The U.S. government’s Energy Information Administration (EIA) data due out at 1530 GMT will be closely watched. Analysts in a Reuters poll forecast the opposite to the API data.

A Reuters market poll predicted the EIA will report a 2.4 million barrel rise in U.S. crude stocks in the week to February 4.

Crude stocks at the delivery point at Cushing, Oklahoma, may surge to a record high.