* Egypt's Mubarak steps down, hands control to army
* Brent premium to U.S. crude hits record above $16/bbl
* Coming up: API oil data, 4:30 p.m. EST Tuesday
(Updates with Brent settlement prices and market activity)
By Robert Gibbons
NEW YORK, Feb 11 (Reuters) - U.S. oil prices fell to a
10-week low on Friday after Egyptian President Hosni Mubarak
stepped down and handed over power to the army.
Mubarak's departure came after 18 days of mass protests
that had raised concern about potential for supply disruptions
and a spread of the turmoil to major oil producers in the
region and had helped push ICE Brent crude futures above $100 a
barrel for the first time since 2008.
Front-month ICE Brent crude for March delivery expired on
Friday, holding on to some gains after the Mubarak departure,
but Brent contracts for nearby months were lower.
Brent's premium to U.S. crude <CL-LCO1=R> reached a record
$16.24 a barrel as U.S. prices fell sharply on the Egyptian
developments. But the spread between April contracts
<CL-LCO2=R> was only around $12 a barrel.
U.S. crude <CLc1> futures for March delivery fell $1.15 to
settle at $85.58 a barrel, the lowest close in 10 weeks and off
3.89 percent on the week, the biggest weekly percentage loss
since the week to Nov. 19.
Expiring March ICE Brent crude <LCOH1> rose 56 cents to
settle at $101.43 a barrel, off its $102.03 intraday peak. The
more actively traded April contract <LCOJ1> fell 50 cents to
settle at $100.94 a barrel.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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 []
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Egypt's change of power ended 30 years of one-man rule by
Mubarak, sparking jubilation on the streets and providing a
cautionary tale to other regimes in the Arab world and beyond.
[]
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.
"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
... may spark other similar movements across the Middle East,"
said Mark Waggoner, president at Excel Futures in Bend,
Oregon.
Money managers increased their net long crude futures
positions on the New York Mercantile Exchange in the week to
Tuesday, as Egypt's protests raged, according to a Commodity
Futures Trading Commission report released late on Friday.
In addition to the unrest in the region, OPEC producers
have been subject to calls to boost production on concerns that
oil prices above $100 a barrel will stifle the global economic
recovery. But, so far, OPEC officials have resisted calls for
an emergency meeting to address high prices and output
targets.
Monthly reports from both the International Energy Agency
and OPEC this week showed higher production from the OPEC
nations, but they expected global demand to keep rising.
[] []
OPTIMISM ABOUT THE ECONOMY
U.S. consumer sentiment rose to its highest level in eight
months in early February, according to the Thomson
Reuters/University of Michigan Surveys of Consumers and in a
separate survey, the U.S. economy and jobs market were seen
growing more strongly in the first quarter than previously
expected. [] []
U.S. stocks rose as Egypt's clearer political picture
lifted investor sentiment. []
The dollar's strength had helped limit crude price gains
ahead of the Mubarak news and the greenback shook off a brief
dip after the news and was boosted by the supportive economic
news, including Thursday's report of a fall in initial jobless
claims last week.
A stronger dollar can curb dollar-denominated oil prices
because consumers using other currencies must pay more for the
commodity and the value of dollars paid to producers is
higher.
(Additional reporting by Gene Ramos and Selam Gebrekidan in
New York and Emma Farge and Patryk Wasilewski in London;
Editing by Walter Bagley)
