Brent rises above US$110 on Ukraine tensions

Publish date: Mon, 28 Apr 2014, 04:37 PM
SINGAPORE: Brent rose above US$110 a barrel on Monday, heading towards a recent seven-week high as tensions rose in eastern Ukraine and getting further support as Libya delayed the re-opening of a damaged eastern port.
The United States and Europe are preparing new sanctions against Russia after the crisis in Ukraine escalated over the weekend. Pro-Russian rebels paraded European monitors they are holding on Sunday, freeing one but saying they had no plans to release another seven.
June Brent crude was at US$110.04 a barrel, up 46 cents, by 0718 GMT after settling down 75 cents on Friday.
US crude for June delivery added 74 cents to US$101.34 a barrel, reversing some of its losses from Friday, when it hit the lowest since April 7.
"I think it should be under US$100, it should be weak. The only thing I can imagine is Ukraine again," said Tony Nunan, a risk manager at Mitsubishi Corp referring to West Texas Intermediate (WTI).
"The other way Russia can really hurt the west is to shut off energy supplies. So people feel that there's a possibility, I guess," he said.
Russia's oil pipeline monopoly Transneft said last week it was worried Ukraine may take control of its oil product pipeline to Hungary.
"If the conflict between the countries escalates, increased fuel demand for military use and heightened risk of disruption will likely continue to strengthen global oil prices," Barclays analysts said in a note at the weekend.
Yusuke Seta, a commodity sales manager at Newedge Japan, said Russia is unlikely to use oil as a political weapon, but investors remained cautious about the risks stemming from the East-West crisis.
In Libya, the government is assessing damage at the eastern oil port of Zueitina following an eight-month oil blockade. Zueitina is one of two ports due to re-open after the government struck a deal with rebels three weeks ago.
"They are unable to increase exports yet and hence it's a little bit supportive for Brent," Newedge's Seta said.
US crude narrowed the gap with Brent to US$8.56 a barrel after it stretched as wide as US$9.28 on Friday.
Analysts blamed record crude inventories in the United States for depressing US crude prices despite a rise in refinery utilisation rates.
"The crude stocks in the US have been mounting rapidly and only that of PADD 2, including Cushing, has been decreasing," Seta said.
Crude inventories are unlikely to be drawn down quickly as US gasoline demand remained limited, he said.
"The flow from Cushing to the Gulf coast should stop at some point and that means inventories at Cushing should increase again. This is a bearish factor for WTI," Seta said.-- Reuters
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zamsaham

Right, so fake. I trade Crude Oil. Weird thing, the price tanked. WTI and Brent. So which one is which now Mr. Analyst?

2014-04-28 23:29

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