* U.S. crude up more than 70 cents from settlement
* Concerns escalate as Mubarak hangs on
* Positive U.S. job data reflects stronger economy
By Seng Li Peng
SINGAPORE, Feb 11 (Reuters) - U.S. crude futures rose above
$87.40 a barrel as tensions in Egypt intensified after President
Hosni Mubarak said he would transfer powers to his vice
president but would not immediately step down as demanded by
protesters.
Increasingly sour confrontation after 17 days of unrest has
raised fears of violence in the most populous Arab nation, a key
U.S. ally in an oil-rich region where the chance of disorder
spreading to other repressive states has troubled world markets.
Mohamed ElBaradei, a Nobel peace prize winner and retired
U.N. diplomat who runs a liberal political movement, wrote on
Twitter: "Egypt will explode. Army must save the country now.
U.S. crude for March delivery gained 73 cents to
$87.46 a barrel by 0327 GMT. Brent crude for March delivery
rose 66 cents to $101.53 a barrel.
The wider gains in U.S. crude helped narrow its discount to
Brent by about $2 to $14.05 after it hit a record of $16.09 a
barrel.
"Yesterday, there were the ups and downs of hopes that the
situation in Egypt was going to be resolved, but that did not
happen," said David Cohen, economist at Action Economics in
Singapore.
"So, there's still a degree of uncertainty hanging. The
politics in Cairo remains a source of pressure on oil prices."
About 3.1 million bpd of oil and refined petroleum products
are shipped through the Suez Canal and Egypt's SUMED pipeline,
according to the head of the U.S. Energy Information
Administration (EIA) Richard Newell.
However, Newell told a congressional hearing that there was
enough spare shipping capacity worldwide to move 4 million to 5
million barrels per day of oil if protests in Egypt shut down
the Suez Canal and the country's major pipeline.
Egypt has been wracked by weeks of protests over the
continued rule of Mubarak and workers this week went on strike
at companies owned by Suez Canal authorities. But so far the
waterway has not been affected.
Oil prices also rose on Thursday following rumours about the
health of Saudi Arabia's King. But its foreign minister Prince
Saud al-Faisal dismissed them, saying King Abdullah bin
Abdul-Aziz was alive and in "excellent shape"
Abdullah, around 87, has been resting in Morocco since
January following a two-month stay in the United States where he
underwent surgery twice after a blood clot complicated a slipped
disc, state media have said.
On oil supplies, Organization of the Petroleum Exporting
Countries (OPEC) said on Thursday it raised output to a two-year
high in January, the latest sign that a recovering world economy
and oil prices of $100 a barrel are encouraging extra supplies
from the producer group.
In a monthly report, OPEC said January production rose by
400,000 barrels per day (bpd) to 29.72 million bpd, the highest
since December 2008 when the group announced a record cut in its
output.
The higher OPEC production and comfortable oil stocks in
developed nations should limit a further oil price spike despite
demand hitting an all-time high later this year, The
International Energy Agency (IEA) said.
"I think there is still enough production capacity," said
Cohen but we are not going to approach the (peak) levels of
2008, at least not this year," said Cohen.
"The underlining demand is still undergoing. I do not think
the tightening by the Chinese central bank is going to alter the
outlook for continual growth in China and other emerging
economies, and these will be supportive of oil prices going
forward."
In the U.S., data was positive with new applications for
unemployment benefits dropping to a 2-1/2-year low last week,
pointing to a stronger footing for the labor market as the
economic recovery gathers momentum.
Initial claims for state unemployment benefits fell 36,000
to a seasonally adjusted 383,000, the lowest since early July
2008, the Labor Department said.
(Editing by Himani Sarkar)
