Oil dips to around $105 as supply concerns ease

By Alex Lawler

LONDON (Reuters) - Oil slipped on Thursday to around $105 a barrel after Egypt's armed forces toppled its president, easing concerns over the threat of supply disruption in the Middle East.

The Suez Canal, a vital waterway for oil shipments, was not affected by the unrest, but analysts said real and threatened supply disruptions in regions including the Middle East, which pumps a third of the world's oil, would support prices.

"It is too early to say that the situation has calmed down, but the safe operation of the Suez, which is in the interest of both Persian Gulf countries and oil-consuming nations, seems to be guaranteed," Tamas Varga, an analyst at oil brokers PVM, said.

Brent crude fell 71 cents to $105.05 a barrel by 1223 GMT, after rising as high as $106.03 on Wednesday, its highest in two weeks.

U.S. crude slipped 44 cents to $100.80, falling from a 14-month peak of $102.18 hit in the previous session.

Besides the perceived risks to Middle East supply due to tension in Egypt, disruption to exports in Libya and Iraq and relatively scarce supply of Russian crude into the Mediterranean have tightened physical oil flows.

"It is still too early to sound the all-clear," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt. "Supply risks are likely to lend continued support to oil prices."

The premium of Brent to U.S. crude was at around $4.30 per barrel after falling to $3.09 on Wednesday, its narrowest since December 2010.

In addition to concerns about Middle East supplies, the U.S. benchmark received a boost when a weekly inventory report showed stockpiles fell by more than 10 million barrels, the biggest drop for the time of year since 2000.

Traders are waiting for Friday's U.S. non-farm payrolls report for affirmation that economic recovery is on track. That could also provide an indication on when the Federal Reserve will start to scale back its bond-buying programme.

Source: http://news.yahoo.com/oil-dips-around-105-supply-concerns-ease-125359670.html

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