* Brent this week atop $100 for first time since Oct. 2008
* IEA says Egypt situation not an emergency
* OPEC member Libya says no need for urgent meeting
* US crude lower on expectation of high US inventories
(Recasts lead, updates prices, analyst quotes, mid outlook)
By Jessica Bachman
LONDON, Feb 1 (Reuters) - Oil edged down on Tuesday, but
remained above $100 a barrel as the market assessed the risk of
Egypt's social unrest spreading to neighbouring OPEC members.
Analysts and traders agreed the uprising against the
Egyptian government was unlikely to disrupt tanker movement and
oil flows along the strategic Suez canal and Sumed pipeline, but
said that the restive mood in the region would support prices.
"The dangers of possible insecurity pushed it to break $101,
but that has been pretty much discounted now, it's been priced
in. For another push, the market is looking for an indication
that demand is growing," said Simon Wardell, oil analyst at
Global Insight.
"In the absence of another sign of demand growth or a weaker
dollar, you could probably expect the price to come down a
little. Then seasonality in demand will kick in and there could
be another push for the $100 range in the second quarter," he
said.
China's factory growth didn't inspire confidence after
slowing to a five-month low, a signal that demand may not rise
quickly in the world's second-largest oil user. []
Brent crude futures <LCOc1> traded 53 cents down at $100.48
a barrel and U.S. crude oil futures <CLc1> fell $1.01 to $91.18
per barrel as of 1350 GMT with the spread between to two grade
being firmly above $9 per barrel.
The market expects the U.S. Energy Department to show high
crude inventories on Wednesday, which analysts said could
further pressure U.S. crude futures.
According to a Reuters poll of analysts, U.S. crude
inventories likely rose 2.8 million barrels last week on higher
imports, while colder weather drew down distillate stockpiles by
1.2 million barrels.
THE EGYPT "WHAT-IF"
The International Energy Agency said on Tuesday the oil
market does not face any emergency, but called on OPEC to remain
"flexible" in the event that contagion does spread and shortages
begin to show. []
The top oil official for OPEC member Libya told Reuters OPEC
does not need to meet to discuss oil policy in February because
the market is well supplied and prices of $100 are justified
[]
Egypt's anti-government protesters, sensing victory after
President Hosni Mubarak agreed to discuss sweeping political
reforms, rallied support for what they hope will be a
million-strong march for democracy on Tuesday.
"The market moves on the what-if factor, so you can't rule
it out," said Toni Machacek, an oil broker at Bache Commodities.
"But if there is a significant reduction of tensions in
Egypt we will settle back to more normal levels and go below
$100 to the upper 90-dollar range we had for the first few weeks
in the year."
The unrest in Egypt comes on the heels of an uprising in
Tunisia that toppled the country's president and is keeping
global investors and traders on the lookout for any signs of
copycat unrest in neighbouring OPEC producer Algeria.
Mubarak's newly appointed vice-president began talks with
opposition figures and the army declared the protesters' demands
"legitimate" and said it would hold its fire.
"While short-term risks remain skewed to the upside, we
think that the current price strength is likely to ease once the
situation in Egypt normalises. Spare OPEC production capacity
remains ample, which should prevent a rapid tightening of the
market balance," said analysts from Credit Suisse.
The Organization of the Petroleum Exporting Countries says
it holds about 6 million barrels per day (bpd) of idle
production capacity -- equal to 7 percent of world demand --
that it could tap to fill any shortage. Most of this capacity is
held by Saudi Arabia.
(Editing by James Jukwey)
