WTI, Brent Gain on Economic Data as Ukraine Tension Increases

Apr 24, 2014 9:47 am ET

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April 24 (Bloomberg) -- West Texas Intermediate and Brent crudes rose as tension increased between Russia and Ukraine, and on signs that U.S. and European economic growth is accelerating.

Oil advanced as Russian President Vladimir Putin warned Ukraine against continuing its offensive against separatists after troops entered the city of Slovyansk, killing five rebels. Government reports showed orders for durable goods poured into U.S. factories in March and German business confidence gained in April. Prices fell yesterday after government data showed U.S. crude supplies at an 83-year high.

“Futures are up because of concern that the fighting in eastern Ukraine will spiral out of control,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “There’s a huge amount of crude in the U.S., which should keep a lid on prices. Any rally will soon come under pressure.”

WTI for June delivery rose 67 cents, or 0.7 percent, to $102.11 a barrel at 9:26 a.m. on the New York Mercantile Exchange. The contract fell 31 cents to $101.44 yesterday, the lowest settlement since April 7. The volume of all futures traded was 5.2 percent above the 100-day average.

Brent for June settlement advanced 82 cents, or 0.8 percent, to $109.93 a barrel on the London-based ICE Futures Europe exchange. Trading volume was 7.5 percent below average. The European benchmark crude traded at a $7.82 premium to WTI. The spread widened for a third day yesterday to close at $7.67.

‘Very Serious’

“If it is true that the current regime in Kiev sent the army against citizens inside its country, then it is a very serious crime against its own nation,” Putin said today at a meeting with the media in St. Petersburg. “It will have consequences for the people who make such decisions, including relations between our countries.”

An agreement to disarm rebels signed last week in Geneva by Ukraine, Russia, the European Union and the U.S. is on the brink of collapse. President Barack Obama said today the U.S. and its allies have more sanctions against Russia ready to go because Putin’s government has yet to abide by the accord. Russia is the world’s biggest energy-producing country.

U.S. bookings for goods meant to last at least three years increased 2.6 percent, the biggest gain since November, after rising 2.1 percent in the prior month, a Commerce Department report showed today in Washington. Orders excluding transportation equipment, which is often volatile, rose by the most in more than a year.

The Ifo institute’s German business climate index, based on a survey of 7,000 executives, advanced to 111.2 from 110.7 in March. Economists predicted a decline to 110.4, according to the median of 34 estimates in a Bloomberg News survey.

U.S. crude stockpiles expanded by 3.52 million barrels to 397.7 million last week, the Energy Information Administration said yesterday. Stockpiles have risen to the most since May 1931, according to monthly government data going back to 1920.

--With assistance from Anthony DiPaola in Dubai.