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Energy Winners & Losers: Egypt Unrest Rallies Oil

Stocks in this article: CVX APA TOT COP XOM

(Crude oil price story updated for market close, political unrest in Egypt)

NEW YORK ( TheStreet) -- Crude oil rallied on Friday as the political unrest in Egypt created fears of a widening political upheaval in the Middle East and a disruption in the global oil supply infrastructure.

Crude was up by as much as 4.8% on Friday, after an up and down week in trading. Crude had declined in six consecutive sessions previous to Wednesday, when it surged and energy stocks rallied to new 52-week highs. Friday's move up in oil was the largest one-day move in crude since 2009. In the afternoon, the price of crude oil settled at $89.34, a 3.7% rise from the previous settle price.

The protests in Egypt, the shutdown of cell phone and Internet service in the country, the images of the headquarters of the ruling political party in Egypt on fire, and the Egyptian army taking to the streets increased fears that a Northern Africa political crisis was widening. The political crisis in Egypt gave new significance to the toppling of the Tunisian president on Jan. 14.

Crude is highly sensitive to fears of production shutdowns and supply disruptions, most recently evidenced earlier in January when the short-term closure of BP's Alaskan pipeline after a leak spurred a rally in crude, though short-lived, when the supply issue turned out to be immaterial to oil delivery.

The Egyptian political upheaval remains a headline risk, as opposed to a concrete disruption to oil production or supply channels, or vulnerability in Middle Eastern oil supply more generally. The Suez Canal was still operating normally on Friday, and a parliamentary leader in Egypt told the Egyptian press late in the day that the country was in "safe hands" with Mubarak.

Yet protests broke out in Yemen on Friday and it stoked fears that Saudi Arabia, the world's largest oil producer, would next face political turmoil.

Energy stocks lost ground on Friday amid a major market selloff, with the company-specific headlines items being an earnings report from Chevron (CVX) and the exposure of Apache Corp. (APA) to Egyptian production assets (see chart above).

Chevron reported an improved fourth quarter, in line with earnings reports from other oil majors, and beat Street consensus, though its level of reserves replacement was judged as weak by analysts, and Chevron shares were down 1.5% on Friday for the second-biggest loss among oil majors after Total (TOT), which closed down close to 3% after it shares were initiated at a sell by Citigroup.

In addition to the price of crude oil, tanker stocks were the big winner on Friday, as fears of a Suez Canal shut down sent the heavily shorted stocks in the sector much higher, with the potential need to divert oil tankers all the way around the southern tip of Africa a boon to a glutted tanker market that had recently seen shares swoon.

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