* Egypt's Mubarak steps down, hands control to army
* Dollar index stronger even after Mubarak news
* Coming up: CFTC positions data 3:30 p.m. EST (2030 GMT)
(Recasts, updates prices and market activity)
By Robert Gibbons
NEW YORK, Feb 11 (Reuters) - Oil prices fell on Friday on
news Egyptian President Hosni Mubarak had yielded to 2-1/2
weeks of mass protests by handing power to the army, easing
concerns about a potential supply disruption in the region.
Egypt is not a major oil producer, but the protests had
stirred concerns about the possible disruption of oil flows
along a strategic pipeline and the Suez Canal, or that unrest
could spread to oil-producing countries in the Middle East.
Egyptian Vice President Omar Suleiman said in a televised
statement that Mubarak had bowed to pressure from the street
and had resigned, handing power to the army. []
"(People) see a lessening of the tension and they're kicking
oil out of the safe-haven bet and selling off what they bought
earlier," said Peter Beutel, president of Cameron Hanover in
New Canaan, Connecticut.
U.S. crude <CLc1> futures were down $1.63 at a 10-week low
of $85.10 a barrel at 12:26 p.m. EST (1726 GMT).
March Brent crude <LCOc1>, which expires on Friday, pared
gains and was up 17 cents at $101.04 a barrel. The more
actively traded April contract <LCOc2> was 60 cents lower at
$100.84 a barrel.
Brent's premium to U.S. crude <CL-LCO1=R> was above $15,
increasing as U.S. prices fell after the Mubarak news and Brent
clung to gains. Brent's premium surged to a record above $16 a
barrel on Wednesday.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on the WTI/Brent spread:
http://r.reuters.com/zad97r
Reuters Insider on market reaction to Mubarak departure:
http://link.reuters.com/bef97r
Oil price gap won't disappear overnight []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Total U.S. crude trading volume neared 523,000 lots in the
noon hour in New York (1700 GMT). Volume was above 985,000 on
Wednesday, according to Reuters data. Brent trading volume was
above 283,000 lots, after more than 657,000 lots traded on
Wednesday.
The dollar's strength had helped limit crude price gains
ahead of the Mubarak news.
While the euro initially pared losses against the dollar on
the Egyptian news, the euro later fell to a three-week low
against the greenback, and the dollar index <.DXY> strengthened
against a basket of currencies. []
But analysts and brokers remained cautious about the
implications of Egypt's political transition for the broader
region, where protesters also have called for changes in Jordan
and Yemen.
"NYMEX crude futures have fallen back on the news of
Mubarak stepping down. But lower prices may be temporary here
as traders will again look broadly and see if protests in
Egypt, which apparently is now about to end, may spark other
similar movements across the Middle East," said Mark Waggoner,
president at Excel Futures in Bend, Oregon.
(Additional reporting by Gene Ramos and Selam Gebrekidan in
New York and Emma Farge and Patryk Wasilewski in London)
