NEW YORK – The price of a key oil contract traded at a two-year high above $102 a barrel Tuesday as antigovernment protest continued in Egypt.
Prices for oil in the Middle East are closely tied to Brent crude, which rose 73 cents to settle at $101.74 a barrel on the ICE Futures exchange in London. It's also used to price oil in Asia and Europe.
Events remained fluid in Egypt, where President Hosni Mubarak announced he won't run again later this year. That followed the largest demonstration yet in a week of protests by citizens calling for the president's immediate resignation.
Many refineries, including those on the East Coast of the U.S., face higher costs because they use Brent to produce gasoline. Experts say, however, that drivers won't immediately face higher pump prices because harsh winter weather has hurt demand.
Average gasoline prices dropped about a penny during the past week to a national average of $3.101 a gallon, according to AAA, Wright Express and Oil Price Information Service.
"It's been an awful winter, definitely not inspiring people to go out and drive," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.
A gallon of gasoline is 2.8 cents higher than a month ago and 43.2 cents higher than the same time last year. Kloza said prices will climb to between $3.50 and $3.75 per gallon by March.
In the U.S., benchmark West Texas Intermediate, or WTI, crude for March delivery fell $1.42 to settle at $90.77 a barrel on the New York Mercantile Exchange. Brent, which analysts say better reflects global oil demand, traded as high as $102.08, a level not seen since October 2008.
More than a quarter-million people flooded Cairo's main square Tuesday in the latest — and largest — protest during a week of unrelenting demands for President Hosni Mubarak's resignation after nearly 30 years in power. Similar demonstrations took place in five other cities around Egypt.
Then, Tuesday night in Cairo, Mubarak said he won't run in September elections and will work towards a "peaceful transfer of power" as he sought to defuse the massive protests.
In other Nymex trading for March delivery, heating oil rose 1.67 cents to settle at $2.7570 per gallon, gasoline futures climbed 1.93 cents to settle at $2.5194 per gallon, and natural gas lost 7.3 cents to settle at $4.347 per 1,000 cubic feet.
Pablo Gorondi in Budapest contributed to this report.