Oil prices mixed after Mubarak resigns

February 12, 2011 | 09:53

(0) user say

Oil prices fell sharply in New York but edged higher in London after Egyptian President Hosni Mubarak was forced out of office after more than two weeks of massive protests calling for his ouster,

illustration photo

New York's main contract, light sweet crude for March, settled at $85.58 a barrel, shedding $1.15 from Thursday's market close.

But in London, Brent North Sea crude for delivery in March rose 56 cents to finish at $101.43 a barrel.

"It was another volatile day for oil prices as the market absorbed renewed unrest in Egypt and then Mubarak's resignation all on expiration of March Brent futures," BMO Capital Markets analysts said in a client note.

The benchmark New York contract, West Texas Intermediate, had plunged sharply on the news. By the end of the session WTI was testing a key support at $85, they said.

"If risk increases the market buys the Brent and sells the WTI. Risk off, sell the Brent crude and buy the WTI," said Phil Flynn at PFG Best.

"If Egypt looks like it’s going to erupt, watch the Brent crude lead the way. WTI will follow but as the spreading of risk continues, it will be the weaker sister in that scenario."

David Kotok at Cumberland Advisors said the developments in the Middle East were ratcheting up the risk to markets, even though US stock markets have seemed to ignore this risk if you only the headline indexes readings are measured.

"Drill into the markets and you see energy, materials and industrial sectors outperforming since the Egyptian crisis exploded. Other sectors are lagging."

AFP

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional