Oil prices fell on Friday in choppy trading after an apparently unfounded television report about a possible announcement from Egypt set off speculation that President Hosni Mubarak could be stepping down. Prices pared losses as there were no reports from other media outlets suggesting any imminent news from Egypt, but remained down more than $1 following stop-loss selling triggered by the knee-jerk move.
Weak US jobless data and gains in the dollar also added pressure. In London, ICE Brent crude for March fell $1.33 to $100.43 a barrel, at 1:53 pm EST (1853 GMT). US crude oil for March delivery fell $1 to $89.54 a barrel, bouncing from a low of $88.45 during the speculative sell-off apparently triggered by a television report.
"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. Traders said the rumour seemed to stem from a brief report on US television channel CNBC, but several hours later there was no news on Egyptian TV about any announcements or transition of power. Foreign exchange and equities markets had minimal reactions to the speculation. Egypt's prime minister said that 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.
Egyption unrest helped drive Brent crude 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. 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 level since April 2009. The tepid job growth was blamed on snow and weather conditions affecting the hiring process.
The dollar rose against the euro and also a basket of currencies, helped by the drop in the jobless rate. A stronger dollar can pressure on dollar-denominated commodities like oil because consumers using other currencies must pay producers more, curbing demand, while the greenbacks paid to producers rise in value.