AP 7/3/2013: Oil above $100 on U.S. supply drop, Egypt’s turmoil

AP 7/3/2013: Oil above $100 on U.S. supply drop, Egypt’s turmoil

AP 7/3/2013: Oil above $100 on U.S. supply drop, Egypt’s turmoil – Trader Peter Iocolano works in the oil options pit at the New York Mercantile Exchange Wednesday, July 3, 2013. Oil climbed above $101 a barrel as the political crisis in Egypt intensified. (AP Photo/Richard Drew). [Source: https://www.houstonchronicle.com/business/energy/article/Oil-above-100-on-U-S-supply-drop-Egypt-s-4646211.php]

NEW YORK – The price of oil rose to its highest level in 14 months amid concerns about possible disruptions to Middle East supplies and signs of an increase in U.S. demand for fuel.

U.S. benchmark oil gained $1.64 to $101.24, its highest close since May 3, 2012. Two events propelled oil above $100 a barrel for the first time since September: unrest in Egypt and a big drop in U.S. oil supplies.

Egypt is not an oil producer but its control of one of the world’s busiest shipping lanes gives it a crucial role in maintaining global supplies.

Some analysts suggested market reaction to the political crisis in Egypt was exaggerated.

“If there is one thing that the military has control of in Egypt it is the Suez Canal,” said Olivier Jakob of Petromatrix.

In the U.S., the Energy Department reported Wednesday that crude supplies fell by 10.3 million barrels from the previous week, more than three times the drop that analysts had expected.

The drop was likely the result of reduced supplies from Canada because of a temporary pipeline shutdown there, as well as more demand from a BP refinery that restarted in Indiana.

The rising price of oil could end what has been a streak of 21 days of lower U.S. retail gasoline prices. The average U.S. pump price fell less than a penny Wednesday to $3.48 per gallon. In Houston, the average price was $3.318 a gallon, down from $3.323 Tuesday.

Analysts do not think the spike in oil prices will lead to sharply higher gasoline prices, though, because U.S. crude supplies remain high and refineries are turning out plenty of gasoline.