Oil prices hit 14-month high on Egypt fears

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Global oil prices surged Tuesday to their highest level since May 2012 as turmoil in Egypt and expectations of tighter U.S. stocks propped up buying.

In New York the benchmark WTI contract for August delivery finished at $103.53, up 39 cents from Monday.

In London Brent North Sea crude for August was 38 cents higher at $107.81 a barrel.

Crude prices were flat for most of the day as a new interim government was named in Egypt amid hopes that the move would restrain street violence, and the International Monetary Fund cut its global growth forecast for this year and next.

The IMF said the world economy would expand by just 3.1 percent this year, lower than the 3.3 percent it forecast three months ago, mainly due to the continued Eurozone recession and sharp slowdowns in emerging economies.

The IMF said it expected major commodity prices to fall, with oil predicted to lose 4.7 percent.

But prices surged late in American trade, possibly linked to expectations of a modest to significant drawdown in U.S. commercial crude stockpiles in the government’s weekly report due out on Wednesday.

One supply problem eased Tuesday when production at a key Libyan oil field resumed after a two week strike. The field generates around 350,000 barrels a day.

But the deadly crash of a runaway oil train in eastern Canada created a new bottleneck for U.S. and Canadian production destined for export.

Egypt, which sits astride the Suez Canal through which much of Middle East crude passes, continued to be the main worry of traders, analysts said.

“Egypt pretty much remains in focus, and traders seem to have priced in a further escalation of the current unrest,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

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