Brent crude futures rose above $108 to the highest in more than three months on Monday, extending last week’s gains as tensions in Egypt kept alive concerns about global oil supplies.
Hundreds of thousands of supporters and opponents of ousted President Mohamed Mursi rallied peacefully in Cairo and Alexandria on Sunday. But the gatherings came after clashes in Egypt claimed more than 30 lives last week, while the military’s plan to resolve the crisis is still bogged down by infighting over who should be interim prime minister.
Any conflict in the Middle East raises worries of disruption to major oil-producing areas or oil shipments. So far, ports and shipping through the Suez Canal, through which a major portion of the world’s oil is shipped, have been operating normally, two shipping sources and a canal official said.
“What’s underpinning the strength in the oil market is the tensions out of the Middle East,” said Ben Le Brun, an analyst at Options Xpress in Sydney. “There’s been some cause for concern and that’s going to continue to put a floor under oil prices.”
Brent crude futures gained 16 cents to $107.88 a barrel by 0400 GMT, after hitting the highest since April 4 earlier in the session.
U.S. crude increased by 37 cents to $103.59 a barrel, after earlier touching a fresh 14-month high of $104.12.
Oil prices were also supported by a U.S. jobs data report on Friday that came in better than expected, signaling that growth in the world’s largest oil consumer is gathering momentum.
U.S. employers added 195,000 new jobs to their payrolls last month, beating expectations of 165,000. The figures for April and May were also revised up by a combined 70,000.
But the data also cemented expectations that the U.S. Federal Reserve could start winding down its massive stimulus program as early as September.
That pushed the U.S. dollar to a three-year high against a basket of currencies and dragged on commodities. A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies, typically pushing down prices.
“If we get some sort of resolution to the Middle East crisis then I think [a stronger U.S. dollar] is going to have a downward impact on oil,” Le Brun said.
Also supporting prices, supply of the North Sea crude oil that underpins the benchmark Brent contract is set to fall by more than 11 percent next month due to maintenance.
Meanwhile, an agreement has been reached with security guards who had shut down two oil ports in eastern Libya, allowing exports to resume, an official said on Sunday, easing some of the supply concerns.
Investors are also keeping an eye on Europe as the euro zone must decide on Monday how to keep Greece on a lifeline. Europe remains divided over whether to delay aid payments to Athens in an attempt to force through reforms ranging from sacking public workers to selling state assets.