Brent crude rose near $102 a barrel on Wednesday as unrest in Egypt kept investors worried about potential supply disruptions, while rising US inventories weighed on US oil prices. US government data showed domestic crude inventories rose 1.9 million barrels last week to 345.1 million barrels, less than analyst expectations for a rise of 2.4 million barrels, while gasoline inventories hit a 20-year high.
The inventory builds helped push Brent's premium against the US crude futures to a fresh record above $15 a barrel, surpassing the previous high of $13.06 hit on Tuesday. US crude for March delivery traded down 15 cents at $86.79 a barrel by 1:55 pm EST (1855 GMT). In London, ICE March Brent rose $2.05 to $101.97 a barrel, after earlier extending the day's high to $102.13.
In Egypt, protest organisers were working on a plan to move on to the state radio and television building on Friday, the day of the next big scheduled demonstration demanding that President Hosni Mubarak step down. The protests have stirred concerns about oil supplies due to the possibility that unrest could spread to oil producing countries in the Middle East, although the shipments through the Suez Canal have not been affected.
"Brent is still reflecting the market concern about Egypt and the Suez Canal," said Tony Nunan, assistant general manager with Mitsubishi Corp in Tokyo. "Oil supply to Europe via the canal would have more impact than to the US" Weekly US inventory data increased the bearish tone for US oil futures, with a report from the US Energy Information Administration showing gasoline stocks in the week to February 4 hitting 240.9 million barrels, the highest level since March 16, 1990.
The build came as gasoline demand over the past four weeks fell by 0.3 percent compared with a year ago, while distillate demand was off 0.1 percent. "Overall, this data is bearish and the entire US energy market is fundamentally weak," said Bill O'Grady, chief investment strategist at Confluence Investment Management in St. Louis, Missouri. The oil market was also weighing comments from US Federal Reserve Chairman Ben Bernanke, who reinforced expectations that the Fed would push ahead with its massive government debt buying stimulus programme as unemployment remained high.