Oil falls from 28-month high as dollar rises

NEW YORK | Thu Feb 3, 2011 1:50pm EST

NEW YORK (Reuters) - Oil fell on Thursday as a stronger dollar pulled crude off a 28-month high that was struck on concern unrest in Egypt could spread and disrupt oil shipments from the Middle East.

The euro fell broadly against the dollar after European Central Bank President Jean-Claude Trichet threw cold water on market expectations euro zone interest rates would rise anytime soon.
Brent crude fell 73 cents to $101.61 at 1:21 p.m. ET. Early in the session it rose to $103.37, the highest level since September 26, 2008.
U.S. crude for March, dropped 60 cents to $90.26 a barrel, sliding from a session high of $92.05.
Further support for the dollar came from positive U.S. economic data on jobs, services and nonfarm productivity.

"Crude prices are down on U.S. economic data and word from the European Central Bank that it will maintain low interest rates," said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut.
Prices were also weighed down by data from industry tracker Genscape showing crude inventories at Cushing, Oklahoma, delivery point for the U.S. oil futures contract, hit a record high this week.
Rising inventories at Cushing have helped pressure U.S. crude prices to a steep $11 a barrel discount to Brent.

The International Energy Agency told the U.S. Congress on Thursday that stronger-than-expected demand from rebounding economies as well unrest in Arab countries helped pushed Brent prices above $100 a barrel.
Brent, the benchmark for crude sales in Europe, the Middle East, Africa and Asia, earlier Thursday topped $103 a barrel as the unrest in Egypt escalated, with pro- and anti-government supporters locked in violent clashes.

The crisis has raised concerns of a disruption to supply of Middle East oil shipped through Egypt and of unrest spreading across the Middle East and North Africa, which combined produce more than a third of the world's oil.
In Yemen, tens of thousands squared off in peaceful protests for and against the government during an opposition-led "Day of Rage," a day after President Ali Abdullah Saleh offered to step down in 2013.