(For Bloomberg fair value curves, see CFVL <GO>)
April 17 (Bloomberg) -- Brent crude traded near a six-week high amid concern that the escalating crisis in Ukraine will disrupt supplies. West Texas Intermediate rose for a second day.
Futures advanced as much as 0.2 percent in London before retreating. Ukraine accused Russia of fueling terrorism in its eastern regions as the North Atlantic Treaty Organization pledged to bolster the defenses of nearby nations. WTI rose after Janet Yellen, in her first speech to a Wall Street audience since becoming Federal Reserve chair, emphasized her commitment to support the U.S. economic recovery.
“The escalating crisis in Ukraine provides strong support to the market amid concerns about oil supply issues in the region,” Myrto Sokou, an analyst at Sucden Financial Ltd. in London, said in an e-mail. “Yellen comments yesterday spread an optimistic tone in the WTI contract amid hopes for a strong U.S. economic recovery.”
Brent for June settlement was 37 cents lower at $109.23 a barrel as of 12:47 p.m. on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $6.30 to WTI for the same month. The spread widened for a third day yesterday to close at $6.57.
WTI for May delivery rose as much as 52 cents to $104.28 a barrel in electronic trading on the New York Mercantile Exchange and was down 2 cents $103.74 a barrel. The contract added 1 cent yesterday. The volume of all futures traded was about 25 percent above the 100-day average. Prices have gained 5.4 percent this year.
“The saber-rattling in eastern Europe is playing a part in the firmness of oil prices,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney, who predicts investors may sell contracts if West Texas climbs to $106 a barrel.
WTI advanced 3.2 percent in the first quarter as Russia, the world’s largest energy exporter, seized the Crimean peninsula. Ukrainian authorities this week used armed force for the first time since taking power in February as they sought to regain control from separatists in the eastern Donetsk region.
On the eve of talks in Geneva today, U.S. President Barack Obama warned that Russia will face additional economic penalties unless President Vladimir Putin backs away from supporting separatist militias in Ukraine and pulls troops from the border.
Yellen told investors to pay attention to shortfalls in both inflation and the jobless rate for signals on the Federal Open Market Committee’s decisions on the policy rate in a speech in New York yesterday.
“The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained,” she said. “This approach underscores the continuing commitment of the FOMC to maintain the appropriate degree of accommodation to support the recovery.”
U.S. crude stockpiles increased by 10 million barrels last week, according to the Energy Information Administration. That’s the most since March 2001 and more than five times the estimate in a Bloomberg News survey of analysts.
Inventories rose to 394.1 million in the week ended April 11, according to the EIA, the Energy Department’s statistical arm. That’s the highest level since June. They were forecast to climb by 1.75 million, the Bloomberg survey of analysts showed.
“Price resilience in the face of that inventory build is remarkable,” McCarthy said.
Gasoline inventories slid by 154,000 barrels for an eighth week of declines, the EIA reported yesterday. Distillate stockpiles, including heating oil and diesel, fell by 1.28 million barrels after expanding the prior three weeks.
In Libya, the oil tanker Aegean Dignity loaded crude as state-run National Oil Corp. prepares to export from the Hariga port for the first time since July. The terminal is one of four seized last year by rebels seeking self-rule in the east of the country, which holds Africa’s largest reserves.
Libya is producing 330,000 barrels a day of crude, according to Mohamed Elharari, a spokesman at National Oil Corp. The Organization of Petroleum Exporting Countries member was pumping almost 1.6 million before the ouster of Muammar Qaddafi three years ago.
--With assistance from Winnie Zhu in Singapore and Ben Sharples in Melbourne.