Oil rebounds in Asia, Brent crude above $102

Oil prices rose in Asian trade Thursday on persistent concerns over the situation in Egypt where the embattled government has warned of a military crackdown against protesters.

New York’s main futures contract, light sweet crude for March, climbed 32 cents to $87.03 a barrel in afternoon trade.

The contract fell overnight on rising US crude stockpiles, an indication of weak demand in the world’s biggest oil-consuming nation.

Brent North Sea crude for delivery in March was up 27 cents to $102.09 a barrel on the IntercontinentalExchange (ICE) in London.

“The situation in Egypt wouldn’t be an enormous blow to physical supply but it has been grappling markets a bit,” said Jason Feer, vice-president and general manager for Argus Media energy market analysts in Singapore.

As protests calling for President Hosni Mubarak to step down escalated in Egypt, Foreign Minister Ahmed Abul Gheit warned the army would intervene.

The United States immediately encouraged the Egyptian army to continue displaying “the restraint that they have shown”.

While Egypt is not a major crude producer, it is home to the Suez Canal, a key shipping route between Europe and Asia that carries about 2.4 million barrels of crude daily, roughly equal to Iraq or Brazil’s output.

There are also concerns that the street protests in Egypt could spill over into the rest of the Middle East, an oil-rich but politically volatile region.

“Crude oil prices have eased back from their recent highs as immediate concerns over supply disruptions have eased, but ICE Brent is still trading above $100 a barrel,” Standard Chartered analysts said in a research note.

“We expect the market to continue to price in a supply-risk premium as geopolitical tensions rumble on near-term.”

Feer said biting cold weather in the northern hemisphere is also helping support oil prices.