Oil Climbs on Egypt as Stocks Decline; Copper Hits $10,000
By Stephen Kirkland - Feb 3, 2011
Oil advanced for a fifth day after protests in Egypt turned violent and unrest spread to Yemen. Copper and cotton rose to records, while European stocks fell.
Brent crude, the benchmark grade for two-thirds of the world’s oil market, climbed as much as 1 percent to $103.37 a barrel, the highest in 28 months, before trading at $102.96 at 7:45 a.m. in New York.
Copper rallied to $10,000 a metric ton and cotton jumped 2.3 percent.
The Stoxx Europe 600 Index slid 0.3 percent while Standard & Poor’s 500 Index futures slipped 0.2 percent. The cost of insuring against default by Egypt increased for a second day.
Gunfire erupted early today in Cairo’s Tahrir Square after supporters of Egyptian President Hosni Mubarak battled with demonstrators demanding an immediate end to his 30-year reign. Tens of thousands of Yemeni pro- and anti-government protesters inspired by uprisings in Tunisia and Egypt flooded the capital city of Sanaa.
“All eyes in the oil market are on the riots and protests in Egypt right now,” said Robert Montefusco, senior broker at Sucden Financial in London. “That’s keeping prices strong, though there hasn’t been any disruption to supplies.”
West Texas Intermediate oil gained 1 percent to $91.78. Copper advanced as much as 0.6 percent in London, extending this year’s rally to 3.9 percent. Cotton climbed to $1.8035 a pound in New York. The S&P GSCI Total Return Index of 24 commodities rose as much as 0.7 percent to 5,159.5, the highest since November 2008.
Three shares declined for every two that rose in Europe’s Stoxx 600. Royal Dutch Shell Plc fell 3 percent after posting earnings that missed estimates. Total SA, which owns about 40 percent of Yemen LNG, a liquefied natural-gas venture in the poorest Arab country, slid 1.3 percent. Deutsche Bank AG gained 2.5 percent after higher trading revenue lifted fourth-quarter earnings. BT Group Plc jumped 3.3 percent after profit beat estimates.
U.S. futures were little changed after the S&P 500 yesterday retreated from its highest level since June 2008. About 72 percent of the S&P 500 companies that have announced results since Jan. 10 topped analysts’ estimates for per-share earnings, according to data compiled by Bloomberg.
Dow Chemical Co. rose 2.4 percent in pre-market trading. The largest U.S. chemical maker posted fourth-quarter earnings that rose more than analysts estimated. Merck & Co., the second- biggest U.S. drugmaker, had fourth-quarter profit of 88 cents a share on an adjusted basis, compared with the average estimate of 83 cents in a Bloomberg survey. The stock was little changed.
Service industries in the U.S. probably kept growing in January at the fastest pace in more than four years, showing the recovery broadened as the year began, economists said before a report due at 10 a.m. New York time. Data from the Labor Department at 8:30 a.m. may show new claims for unemployment benefits dropped by 34,000 from the prior week to 420,000, according to the median forecast.
The cost of insuring Egyptian sovereign debt rose, with credit-default swaps climbing 11 basis points to 388.5, according to CMA. Orascom Construction Industries, Egypt’s largest publicly traded company, fell 3 percent in London. Egypt’s stock market was closed for a fifth day.
The MSCI Emerging Markets Index gained 0.1 percent. Reliance Industries Ltd., owner of the world’s biggest oil- processing complex, led the Bombay Stock Exchange Sensitive Index 2 percent higher. Markets are shut for Lunar New Year holidays in China, Taiwan, South Korea, Malaysia, Indonesia and Vietnam.
The U.K. pound rose against all but one of its 16 most- traded peers after a report showed Britain’s services companies grew faster than forecast in January. The currency gained 0.1 percent against the dollar and 0.4 percent per euro.
Europe’s single currency weakened 0.4 percent against the dollar and 0.2 percent versus the yen. The European Central Bank kept its benchmark interest rate at a record low of 1 percent today, matching the prediction of all 58 economists in a Bloomberg survey.
The Australian dollar gained versus all 16 of its major counterparts as data on building permits and trade pointed to a resilient economy. The so-called Aussie added 0.3 percent versus the dollar and 0.5 percent against New Zealand’s currency.
Spanish 10-year bonds declined, pushing the yield up five basis points to 5.15 percent, as the nation issued 3.5 billion euros ($4.8 billion) of three-year and five-year notes. Spain auctioned 1.89 billion euros of the three-year debt at an average yield of 3.25 percent, down from 3.72 percent at a sale in December.
U.S. 10-year Treasury notes were little changed, with the yield at 3.48 percent, while two-year yields climbed two basis points to 0.68 percent. German bonds were also little changed, with the 10-year yield two basis points lower at 3.24 percent.
Dr. Pinna says:
As I mentioned two days ago, the price of oil is going higher and North Africa will be a tinder bed of violence.
We will shortly see weapons being brought to Egypt and other nations from those countries that have them. This will escalate the violence and put more pressure on the price of oil.