Oil falls on unfounded Egypt report, profit-taking
NEW YORK (Reuters) - Oil prices fell nearly 2 percent on Friday after an unfounded report about a possible announcement from Egypt set off speculation that President Hosni Mubarak could step down shortly, sparking profit-taking from which the market failed to recover.
Prices pulled back from the day's lows as it became clear there was no imminent news from Egypt, but Brent still settled below $100 a barrel for the first time in a week as traders latched onto the rumor as an excuse to sell.
Weak U.S. nonfarm payrolls data and modest gains in the dollar also pressured oil.
In London, ICE Brent crude for March fell $1.93 to settle at $99.83 a barrel, off a $102.48 intraday peak, logging its biggest daily percentage decline since mid-November. It managed a 41-cent gain on the week.
U.S. crude for March delivery fell $1.51 to settle at $89.03 a barrel, managing to bounce from an $88.45 low hit during the speculative sell-off, just above the week's nadir. U.S. crude ended down 31 cents on the week.
"The expectation that some resolution was coming flushed a lot of length out of the market," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Egyptian unrest had helped drive Brent above $100 for the first time since 2008, but some traders said a correction was due as there was little sign of the turmoil affecting nearby oil producers or disrupting Suez Canal transport.
"The trade finished on a weak note as shorts were apparently emboldened by Brent's drop back below the $100 mark," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note.
RATTLED BY RUMOR
Traders said the rumor seemed to stem from a brief report on U.S. television channel CNBC, but several hours later there was no news on Egyptian TV about any announcements or transition of power. Gold edged down on the report, but foreign
exchange and equities markets were unaffected.
Egypt's prime minister said it was unlikely the president would hand presidential powers to his newly appointed deputy, while hundreds of thousands of Egyptians marched peacefully in Cairo to demand an immediate end to Mubarak's 30-year rule.
Investors will continue to eye the region after demonstrations this week in Yemen and Friday's protests in Jordan, where demonstrators said King Abdullah's government reshuffle did not meet their calls for political reform.
They will also be looking for any signs that OPEC could move to damp down triple-digit prices by pumping more crude, something price hawks such as Venezuela say is unnecessary.
"There is sufficient oil and there have been no interruptions, but if they close Suez, that could take the oil price to $200," Oil Minister Rafael Ramirez told reporters.
U.S. EMPLOYMENT REPORT MIXED
Earlier, the January jobs report from the United States showed that nonfarm payrolls grew by only 36,000, well below forecasts for a rise of 145,000. The unemployment rate fell to its lowest since April 2009.
The tepid job growth was blamed on snow and weather conditions affecting hiring.
The dollar rose against the euro and a basket of currencies , helped by the drop in the jobless rate.
A stronger dollar can pressure dollar-denominated commodities such as oil because consumers using other currencies must pay producers more, curbing demand, while the greenbacks paid to producers rise in value.