Oil prices slipped below $92 a barrel Tuesday amid concerns that a chaotic power struggle in Egypt could spread to neighboring oil-rich countries — even as fears eased about disruptions to the Suez Canal, a major route for oil tankers to Europe and North America.
By early afternoon in Europe, benchmark crude for March delivery was down 60 cents to $91.59 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.85, or 3.2 percent, to settle at $92.19 on Monday.
In London, Brent crude was down 49 cents at $100.52 a barrel on the ICE Futures exchange. On Monday, Brent surpassed $100 for the first time since October 2008 and traded as high as $101.73.
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Opposition leaders are planning a massive street protest in Cairo on Tuesday in a bid to oust 82-year-old President Hosni Mubarak as an uprising against his 29-year rule begins its second week. Egypt's military said Monday it would not use force on marchers and recognized "the legitimacy of the people's demands."
Oil has jumped nearly 8 percent in the last two trading sessions on fears that chaos in Egypt could disrupt the 2 million barrels of crude per day that pass through the Suez Canal and an adjacent pipeline.
So far, however, the Suez remains open, shipping has not been interrupted and experts said there were ways to circumvent the area.
"Any major logistical interruptions related to the political uncertainties seem to be rather unlikely at the moment," said a report from JBC Energy in Vienna. "Even if the worst case scenario of a complete halt of traffic through the crucial link materializes, the global surplus in shipping capacity would allow a switch to the longer haul journey around southern Africa without too much of a headache."
On the other hand, analysts seemed more worried that the violent street protests — which toppled Tunisian President Ben Ali last month — could spread from North Africa to oil-rich Middle Eastern countries.
"The force and duration of this market propellant will depend upon the shape and form of the resolution of the Egyptian uprising and whether this wave of public discontent ends with Egypt or continues to spread to neighboring countries," Soultanian said.
JBC Energy said there appeared to be "a substantial risk" of that happening.
The Paris-based International Energy Agency said that while the events in Egypt were contributing to rising oil prices, it saw "no immediate threat to energy supplies."
"Commercial stocks are ample, including in Europe, where most" of the oil passing through Egypt and the Suez is destined, the IEA said, calling on oil producers to ensure "ample and affordable supplies."
Prices were also pressured by expectations of even larger U.S. crude and product stockpiles.
Data for the week ending Jan. 28 is expected to show builds of 3 million barrels in crude oil stocks and 2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
In other Nymex trading in March contracts, heating oil fell 1.74 cents to $2.7229 a gallon and gasoline slid 0.62 cent to $2.4939 a gallon. Natural gas futures were down 8.3 cents at $4.337 per 1,000 cubic feet.
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