All trading involves risk. Losses can exceed deposits.

Crude oil smashes through $100 per barrel

A huge drop in US crude inventories and growing unrest in Egypt has helped oil extend its rally today.

All trading involves risk. Losses can exceed deposits.

Crude oil futures rocketed to their highest price in 14 months today, following US government data showing the biggest fall in domestic oil supplies so far this year.

The Energy Information Administration reported that crude oil inventories shrank by 10.3 million barrels last week to 383.8 million. A large drop had been widely expected, but the magnitude of the fall took the market by surprise, sending prices sharply higher. A Thomson-Reuters survey ahead of the release had pointed to a decrease of 2.32 million barrels.

Crude oil futures for August were up 1.7% at $101.13 per barrel by early afternoon in New York.

Political discord in Egypt has also helped fuel the rise in oil prices. The national security advisor to Egyptian president Mohammed Mursi claimed today that a military coup had begun, following the passing of a military deadline for the government to acquiesce to the demands of protestors without any result.

More than 2 million barrels of oil per day are shipped via the Suez Canal and the Suez-Mediterranean Pipeline, both of which are controlled by Egypt. The tense political situation in Egypt therefore has led to heightened concern that supplies from the Middle East could be disrupted.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.