Oil prices eased on Thursday as a stronger dollar pulled crude off a 28-month high that was struck on concern unrest in Egypt could spread and disrupt oil shipments from the Middle East. The euro fell against the dollar after European Central Bank President Jean-Claude Trichet threw cold water on market expectations euro zone interest rates would rise any time soon.
Brent crude for March delivery settled at $101.76 a barrel, down 58 cents. Early in the session it rose to $103.37, the highest level since September 26, 2008. US crude for March ended at $90.54, down 32 cents. It slid from a session high of $92.05. Further support for the dollar came from positive US economic data on jobs, services and nonfarm productivity.
"Crude prices are down as the dollar rose on US economic data and word from the European Central Bank that it will maintain low interest rates," said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut. Prices were also weighed down by data from industry tracker Genscape showing crude inventories at Cushing, Oklahoma, delivery point for the US oil futures contract, hit a record high this week.
Rising inventories at Cushing have helped pressure US crude prices to a steep $11 a barrel discount to Brent.. Adding to the day's bearish sentiment, seaborne oil exports by the Organisation of Petroleum Exporting Countries were forecast to rise 410,000 barrels per day in the four weeks to February 19, according to a weekly forecast from UK oil consultancy Oil Movements.
The International Energy Agency told the US Congress on Thursday that stronger-than-expected demand from rebounding economies as well unrest in Arab countries helped push Brent prices above $100 a barrel. Brent, the benchmark for crude sales in Europe, the Middle East, Africa and Asia, earlier Thursday topped $103 a barrel as the unrest in Egypt escalated, with pro- and anti-government supporters locked in violent clashes.
The crisis has raised concerns of a disruption to supply of Middle East oil shipped through Egypt and of unrest spreading across the Middle East and North Africa, which combined produce more than a third of the world's oil.
In Yemen, tens of thousands squared off in peaceful protests for and against the government during an opposition-led "Day of Rage," a day after President Ali Abdullah Saleh offered to step down in 2013. Algeria, an Opec member, promised to end a 19-year-old state of emergency and provide more political freedoms, concessions designed to keep out a wave of uprisings sweeping the Arab world. Investors next focus on Friday's report on US payrolls and the unemployment for January, a key indicator of how the economic recovery is shaping up.
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