Diesel Gains as Brent Crude Climbs on Russia-Ukraine Tensions

Apr 14, 2014 3:33 pm ET

April 14 (Bloomberg) -- Diesel futures climbed to a five- week high, following Brent crude as the benchmark for half the world’s oil rose amid tensions between Russia and Ukraine.

Diesel and Brent each gained 1.6 percent as European officials weighed expanding sanctions against Russia, saying the biggest energy exporter is stoking separatist unrest in Ukraine.

“Brent is really being supported on the tensions involving Ukraine and the threat of economic sanctions against Russia,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Ultra low sulfur diesel for May delivery rose 4.59 cents to $2.9791 a gallon on the New York Mercantile Exchange, the highest settlement since March 7. Volume was 7.4 percent below the 100-day average as of 3:16 p.m.

Brent for May settlement increased $1.74 to settle at $109.07 on the London-based ICE Futures Europe exchange.

European Union foreign ministers, gathering for a meeting today in Luxembourg, said the bloc should be prepared to impose a third round of sanctions as armed separatists in eastern Ukraine ignored a deadline to release official buildings they’ve occupied. Russian Foreign Minister Sergei Lavrov denied his nation is involved.

Libyan Events

Brent crude, and oil products indirectly, also got a boost from confusion about the timing for the return of Libyan oil exports to the market. While one of four ports seized by rebels last year is ready to receive tankers, according to Arabian Gulf Oil, Prime Minister Abdullah Theni said yesterday he was resigning and that his family was attacked last night, state-run news agency LANA reported.

“More important to Brent than Russia-Ukraine is the confusion with what is going on in Libya,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. Libya is holder of Africa’s largest crude reserves.

Diesel’s crack spread versus West Texas Intermediate crude widened $1.62 to $21.07 a barrel. The premium to Brent rose 19 cents to $16.05.

May-delivery gasoline rose 2.4 cents, or 0.8 percent, to to $3.0384 a gallon, the highest settlement since Aug. 29, on volume that was little changed from the 100-day average.

May gasoline’s crack spread versus WTI gained 70 cents to $23.56 a barrel. The motor fuel’s premium to Brent slid 73 cents to $18.54 a barrel.

The average U.S. pump price rose 0.3 cent to $3.638 a gallon, the highest since July 26, according to data from Heathrow, Florida-based AAA. Prices are 10.6 cents higher than a year ago.