Last Thursday, after Egyptian army ousted its president, helping to ease concerns over the threat of supply disruption in the Middle East, oil price slipped towards 105 USD per barrel.
A vital waterway for oil shipment, the Suez Canal, has reported to be not affected by the recent unrest, though a few analysts say that there are some real problems which look very threatening for seamless oil supply.
Tamas Varga, an analyst at oil brokers PVM , explained, "It is too early to say that the situation has calmed down, but the safe operation of the Suez, which is in the interest of both Persian Gulf countries and oil-consuming nations, seems to be guaranteed.”
The price of Brent crude fell 29 cents to $105.47 a barrel by 1855 GMT, after rising to $106.03 on Wednesday, a two-week high. U.S. crude slipped 12 cents to $101.12, falling from a 14-month peak of $102.18 hit in the previous session.
Oil trimmed losses alongside a rally in European shares, following guidance from the European Central Bank and the Bank of England that any interest rate rises were a long way off. Both central banks kept rates unchanged.
No not the risks within Middle East supplies are perceived, but the recent unrest in Egypt has resulted disruptions to Libya and Iraq and relatively scarce supply of Russian crude into the Mediterranean have tightened physical oil flows.
"It is still too early to sound the all-clear," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt. "Supply risks are likely to lend continued support to oil prices."
The premium of Brent to U.S. crude CL-LCO1=R was around $4.35 per barrel after falling to $3.09 on Wednesday, it’s narrowest since December 2010. Floor trading is closed in New York because of the Independence Day holiday.
Traders are waiting for Friday's U.S. non-farm payrolls report and anticipating to see the economic recovery on track.