(For Bloomberg fair value curves, see CFVL <GO>.)
April 21 (Bloomberg) -- West Texas Intermediate and Brent crudes rose to seven-week highs as tension escalated between Ukraine and Russia and the U.S. economic expansion showed signs of strengthening.
WTI settled at the second-highest level of 2014 as shootouts in eastern Ukraine led to renewed calls in the U.S. for sanctions against Russia, the world’s biggest energy- producing nation. The Conference Board’s index of leading economic indicators, a gauge of the American outlook for the next three to six months, rose 0.8 percent, the New York-based group said today. A report last week showed initial U.S. jobless claims near a seven-year low.
“We’re still looking at tension in Ukraine and all the Russian oil that hangs in the balance if things get even worse,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The economic data is getting better, with Thursday’s employment data and the LEI today supportive for demand as we near gasoline season.”
WTI for May delivery, which expires tomorrow, advanced 7 cents to $104.37 a barrel on the New York Mercantile Exchange. It was the highest settlement since March 3. The more active June contract increased 28 cents, or 0.3 percent, to close at $103.65. Trading was 23 percent below the 100-day average at 2:59 p.m.
Brent for June gained 42 cents, or 0.4 percent, to end the session at $109.95 a barrel on the London-based ICE Futures Europe exchange. It was the highest close since March 3. Volume was 69 percent below the 100-day average. Trading on both Nymex and ICE was closed on April 18 for Good Friday.
WTI for June delivery settled at a $6.30 discount to the Brent contract for delivery the same month.
At least three people were killed in a clash in Slovyansk in eastern Ukraine, according to the Interior Ministry, while a senior security official accused Russia of exploiting the violence to prepare grounds for an invasion.
After negotiations in Geneva on April 17, diplomats from Ukraine, the U.S., the European Union, and Russia called for illegal groups in Ukraine to disarm, return seized buildings to their owners and free occupied public places. In line with the pact, the government in Kiev prepared an amnesty law for pro- Russian protesters.
“Prices have already risen to pretty lofty levels given the fundamentals,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “Uncertainty about the crisis in Ukraine should support prices and keep us from falling much.”
The leading economic indicators were projected to advance 0.7 percent, according to the median of 42 economist estimates in a Bloomberg survey.
The number of Americans filing for unemployment insurance payments during the week of April 12 rose by 2,000 to 304,000, Labor Department figures released on April 17 showed. The total number of people receiving benefits fell by 11,000 to 2.74 million in the week ended April 5, the fewest since December 2007, the report showed.
Gasoline for May delivery rose 3.22 cents, or 1.1 percent, to $3.0869 a gallon in New York. It was the highest settlement since Aug. 28.
U.S. gasoline consumption peaks between the Memorial Day holiday in late May and Labor Day in early September, when Americans traditionally take vacations.
President Barack Obama’s administration said on April 18 that it will postpone a ruling on the Keystone XL pipeline that would bring Canadian crude to the U.S. The State Department said it wouldn’t make a recommendation until questions are resolved about the way the pipeline’s northern route through Nebraska was approved. The southern portion of the project began moving crude to the Texas Gulf Coast from Cushing, Oklahoma, in January.
The U.S. government’s decision to delay a ruling on Keystone may push back until after the November midterm elections a decision on the $5.4 billion project that pits the president’s environmental supporters against labor backers who want construction jobs.
Implied volatility for at-the-money WTI options expiring in June was 16.8 percent, up from 16.7 percent April 17, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 346,147 contracts at 3:04 p.m. It totaled 555,756 contracts April 17, 2.9 percent above the three-month average. Open interest was 1.67 million contracts.
--With assistance from Anthony DiPaola in Dubai.