Brent crude is gaining on West Texas Intermediate contract as fears are rising that the situation in Egypt could spin out of control. That tension added more upward momentum to Brent, which already was being supported by labor unrest in Libya.
Overnight it seems that oil is now worried more about the prospects of the Fed tapering than all other global geopolitical and storm worries. Strong data out of Europe is offsetting concerns from Egypt.
Oil looks heavy while the stock market is in a Fed induced stupor. A rumor overnight of a blast in the Suez Canal was denied by the Egyptian military yet is a reminder that we have seen the market put in a sizable Egyptian premium.
Oil had a hard time deciding whether or not it wanted to continue its upward trajectory. While Egypt continues to simmer and we saw more violence, the truth is that the fears of an immediate risk to supply seems to be waning.
A much larger than expected decline in crude oil as reported by the API last night coupled with the growing unrest in Egypt has pushed the spot WTI price back above the $100/bbl level for first time since September 2012.
I have been telling my clients that for WTI crude oil to get above $100 a barrel we would need an event. Not only did Egypt's President act defiant against military demands, then we had a big drop in American Petroleum Institute's supply report.