Oil dips below US$101

The price of oil eased below US$101 a barrel Thursday after jumping higher on unrest in Egypt and signs of rising demand in the United States.

By early afternoon in Europe, benchmark crude for August delivery was down 48 cents at US$100.76 in electronic trading on the New York Mercantile Exchange.

On Wednesday, the contract gained US$1.64 to US$101.24, its highest close since May 3, 2012.

Nymex floor trading is closed Thursday for the Independence Day holiday.

Traders were worried that political upheaval in Egypt could slow the flow of oil from the Middle East to world markets.

Embattled Egyptian President Mohammed Morsi was removed from office Wednesday by the country's armed forces and taken into custody.

Morsi was replaced by Adly Mansour, the chief justice of Egypt's Supreme Constitutional Court, who was sworn in Thursday as interim president.

According to military decree, Mansour will serve as Egypt's interim leader until a new president is elected. A date for that vote has yet to be set.

Egypt is not an oil producer but its control of one of the world's busiest shipping lanes gives it a crucial role in maintaining global energy supplies. The Middle East accounts for about a quarter of the world's crude oil output, or 23 million barrels, per day.

About two million barrels of that, or 2.2 per cent of world demand, are transported daily through the Suez Canal, which links the Mediterranean with the Red Sea.

In the US, the Energy Department reported Wednesday that crude supplies fell by 10.3 million barrels from the previous week, more than three times the drop that analysts had expected.

In other trading, Brent crude was down 65 cents to US$105.11 on the ICE exchange in London.

In other energy futures trading on Nymex, wholesale gasolene was down 1.39 cents to US$2.8243 per gallon.

Natural gas fell 3.1 cents to US$3.659 per 1,000 cubic feet.

Heating oil retreated 1.49 cents to US$2.9363 per gallon.