(Bloomberg News) Oil dropped from a two-year high as concern eased that supplies through the Suez Canal may be disrupted by unrest in Egypt. Brent crude traded at more than $100 a barrel for a second day.

Futures fell as much as 1.1% , trimming a two-day gain after Suez Canal officials said traffic is moving normally through the main artery for more than 2.2 million barrels of oil a day. A U.S. government report tomorrow may show stockpiles grew for a third week, according to a Bloomberg News survey.

"So far the escalating violence in Suez has seen no specific targeting of shipping facilities or passing ships," Andrey Kryuchenkov, a London-based analyst at VTB Capital, said in a note. "We still see little threat to major producing nations, with the exception of Algeria, where we had some unrest earlier this month."

Oil for March delivery on the New York Mercantile Exchange dropped as much as $1.03 to $91.16 a barrel and was at $91.30 a barrel at 1:44 p.m. London time. Yesterday it gained to $92.19, the highest settlement since Oct. 3, 2008. Futures rose 0.9%  in January. Brent for March settlement fell as much as 82 cents, or 0.8% , to $100.19 a barrel on the ICE Futures Europe exchange in London. It rose to $101.73 yesterday, the highest price since Sept. 29, 2008.

Egypt Unrest

Futures in New York rose 3.2%  yesterday as opposition groups demanding Egyptian President Hosni Mubarak's ouster urged more people onto the streets. About 2.5%  of global oil production moves through Egypt via the Suez Canal and the adjacent Suez-Mediterranean Pipeline, according to Goldman Sachs Group Inc.

The canal was operating normally today amid the mounting protests, according to an official from the waterway.

Fifty-six vessels are passing through the canal, more than the average of about 50, Ahmed El Manakhly, head of traffic for the Suez Canal Authority, said in an interview with Andrea Catherwood on Bloomberg Television's "The Pulse." Mubarak has meanwhile offered to negotiate with opposition movements.

"By the looks of it, the army is not going to attack the people, which removes the risk premium in the market," Kryuchenkov at VTB said by phone.

The Organization of Petroleum Exporting Countries would increase output if the unrest in Egypt disrupts supplies from the Middle East, Secretary-General Abdalla el-Badri said in London yesterday. Crude prices at $70 to $80 a barrel are "appropriate," Saudi Arabian Oil Minister Ali al-Naimi said at a conference in Geneva yesterday.

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