Oil falls to near 6-week low as Ukraine concern eases
London, March 19, 2014
Oil fell to around $106 a barrel on Wednesday, close to a six-week low, as concerns eased about an escalation of the Ukraine crisis and on forecasts for a rise in US oil inventories.
Russian President Vladimir Putin signed a treaty on Tuesday making Crimea part of Russia again but said he did not plan to seize any other regions of Ukraine. Western sanctions imposed on Monday targeted individuals, not broad trade.
Brent was down 78 cents at $106.01 a barrel by 1320 GMT. It had traded as low as $105.85 on Tuesday, the lowest since Feb 5. US crude rose 30 cents to $100.00.
"For Brent, we are at similar levels to yesterday. Ukraine and the Crimea are not having much impact," said Christopher Bellew, a broker at Jefferies Bache in London.
Oil also came under pressure from a report on Tuesday by industry group the American Petroleum Institute that showed US crude inventories rose by 5.9 million barrels last week, more than analysts had forecast.
Attention will focus on the weekly report from the US government's Energy Information Administration at 1430 GMT to see whether it confirms the buildup.
"Judging by the figures published yesterday by the American Petroleum Institute, the increase in crude oil stocks could turn out to be more pronounced than anticipated and thus weigh on prices," said Barbara Lambrecht, analyst at Commerzbank.
Still, US crude prices gained support from data in the API report showing that stocks at the Cushing, Oklahoma hub had fallen by 1 million barrels and by the expansion of a key pipeline.
The operator of the Seaway pipeline, which takes crude from Cushing to the US Gulf Coast, said the conduit would be ready to double shipments by May, earlier than some analysts had expected.
This will drain stockpiles at Cushing and lend support to US crude prices, analysts say.
"The API crude build has not had as much impact as one might expect because of yesterday's news," Bellew said. - Reuters