Crude rises past $101

Political protests in Egypt and U.S data impact prices

Crude Oil futures rose past $101 a barrel on Wednesday, 03 July 2013 as concerns about the Middle East oil trade intensified in the wake of political protests in Egypt and after a U.S. report showed a much bigger-than-expected drop in last week's crude supplies.

Crude for August delivery traded at $101.86 a barrel on the New York Mercantile Exchange, up $2.26, or 2.3%. It touched highs above $102. Futures prices were on track for their highest settlement since May 2012.

The U.S. Energy Information Administration on Wednesday reported that supplies dropped by 10.3 million barrels for the week ended June 28. Markets was looking for a 3 million-barrel decline. Gasoline supplies also declined by 1.7 million barrels, while distillate stockpiles fell 2.4 million barrels. Gasoline stockpiles were expected to rise by 1 million barrels, while forecasts called for an increase of 1.3 million barrels for distillates.

Portugal returned to headlines after two key government officials (finance minister and foreign minister) submitted their resignations. In addition, reports indicate two more ministers (agriculture and social security) are set to follow suit. As a result, the country's benchmark 10-yr yield spiked 85 basis points to 7.31%. In addition Portugal's PSI index fell 5.3%. The concerns regarding the country's future spilled over to other peripheral economies. Italy's 10-yr yield climbed 11 basis points at 4.51% while Spain's benchmark 10-yr yield jumped 14 basis points to 4.70%.

Today's economic data at Wall street was plentiful. The initial claims level decreased from an upwardly revised 348,000 (from 346,000) for the week ending June 15 to 343,000 for the week ending June 29. The consensus pegged the initial claims level at 348,000.For the past several weeks, the initial claims level has moved in a slight sawtooth pattern, but overall, trends have been relatively flat. Labor conditions have not materially changed over this time.

The June ISM Services Index was reported at 52.2, below the 54.0 forecast by the consensus, and down from the May reading of 53.7.

Separately, the U.S. trade deficit widened to $45.0 billion in May from an upwardly revised $40.1 billion (from $40.3 billion) in April. That was the largest deficit since November 2012. The consensus expected the trade deficit to increase to $40.8 billion. The goods deficit rose to $63.4 billion in May from $58.4 billion while the services surplus increased to $18.4 billion from $18.3 billion. May exports fell by $0.5 billion from $187.6 billion in April to $187.0 billion.

Among other energy products, August gasoline rose 6 cents, or 2.2%, to $2.85 a gallon, and August heating oil climbed 6 cents, or 2.1%, to $2.96 a gallon.

Natural gas for August delivery fell 7 cents, or 1.8%, to $3.59 per million British thermal units after climbing 2.2% on Tuesday.