11.02.2011, 10:44 12002

Oil prices rise

U.S. crude futures rose above $87.40 a barrel, Kazakhstan Today reports.

Almaty. February 11. Kazakhstan Today - U.S. crude futures rose above $87.40 a barrel, Kazakhstan Today reports.

U.S. crude futures rose above $87.40 a barrel as tensions in Egypt intensified after President Hosni Mubarak said he would transfer powers to his vice president but would not immediately step down as demanded by protesters, Reuters reported.

Increasingly sour confrontation after 17 days of unrest has raised fears of violence in the most populous Arab nation, a key U.S. ally in an oil-rich region where the chance of disorder spreading to other repressive states has troubled world markets.

U.S. crude for March delivery gained 73 cents to $87.46 a barrel by 0327 GMT. Brent crude for March delivery rose 66 cents to $101.53 a barrel.

The wider gains in U.S. crude helped narrow its discount to Brent by about $2 to $14.05 after it hit a record of $16.09 a barrel.

About 3.1 million bpd of oil and refined petroleum products are shipped through the Suez Canal and Egypt's SUMED pipeline, according to the head of the U.S. Energy Information Administration (EIA) Richard Newell.

However, Newell told a congressional hearing that there was enough spare shipping capacity worldwide to move 4 million to 5 million barrels per day of oil if protests in Egypt shut down the Suez Canal and the country's major pipeline.

Egypt has been wracked by weeks of protests over the continued rule of Mubarak and workers this week went on strike at companies owned by Suez Canal authorities. But so far the waterway has not been affected.

Oil prices also rose on Thursday following rumors about the health of Saudi Arabia's King. But its foreign minister Prince Saud al-Faisal dismissed them, saying King Abdullah bin Abdul-Aziz was alive and in "excellent shape"

On oil supplies, Organization of the Petroleum Exporting Countries (OPEC) said on Thursday it raised output to a two-year high in January, the latest sign that a recovering world economy and oil prices of $100 a barrel are encouraging extra supplies from the producer group.

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