Oil at 6-week high on Ukraine crisis
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West Texas Intermediate crude advanced to a six-week high amid concern that the crisis in Ukraine is escalating. Brent's gains were limited by signs of slowing economic growth in China. Futures gained as much as one per cent in New York. Ukraine began an offensive against separatists in its restive east, recapturing an airport amid claims that Russian special forces were supporting anti-government groups. China's gross domestic product expanded by a seasonally adjusted 1.4 per cent in the first quarter, down from 1.7 per cent in the previous three months, according to the National Bureau of Statistics.
"Oil is being driven more by the Ukraine situation," said Guy Wolf, global head of market analytics at Marex Spectron Group in London, by e-mail. "Does this situation mean more intense disagreements elsewhere as in the Cold War? In a tight market, such as WTI, anything can have an amplified effect."
WTI for May delivery gained as much as $1.07 to $104.82 a barrel in electronic trading on the New York Mercantile Exchange, the highest since March 4. The US benchmark grade's discount to Brent for the same month widened to $6.19 a barrel, the most since March 28 on a closing basis.
Brent for June settlement rose 68 cents, or 0.6 per cent, to $110.04 a barrel on the London-based ICE Futures Europe exchange by 9:53 am London time. The volume of all futures traded was about 30 per cent above the 100-day average. Prices fell 0.7 per cent this year.
Chinese growth
China's economy expanded at the weakest pace in six quarters as risks mount of Premier Li Keqiang missing his government's annual growth target of 7.5 per cent. GDP advanced by 7.4 per cent in the January-to-March period from a year earlier, compared with a 7.3 per cent median estimate in a Bloomberg News survey of economists.
"The headline GDP data wasn't good," Sijin Cheng, a commodities analyst at Barclays Plc in Singapore, said by phone today. "Also the market has been preoccupied by all the geopolitics, the tensions. Given that context, the reaction has been relatively muted."
The Asian nation, the world's second-biggest oil consumer, will account for about 11 per cent of global demand this year, compared with 21 per cent for the US, according to the International Energy Agency in Paris.
Dismissing macro
"Oil prices have been quick to dismiss macroeconomics lately," said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark, by e-mail. "The tensions in Ukraine are the main driver for oil prices at the moment."
Ukraine's offensive yesterday marked its first foray against armed activists holding government buildings in cities near the Russian border. Interior Ministry units ousted pro-Russian activists who had seized the airfield in Kramatorsk. Efforts to contain the insurgency risk escalating tensions with the government in Moscow, which warned of a potential civil war.
Russia has 40,000 troops massed on Ukraine's border after its annexation of Crimea last month, the North Atlantic Treaty Organization said.
Oil stockpiles
Crude inventories in the US are forecast to have increased for the 12th time in 13 weeks, a separate Bloomberg survey shows before a report from the Energy Information Administration on Wednesday.
Stockpiles probably rose by 1.75 million barrels to about 385.9 million in the seven days ended April 11, according to the median projection of 10 analysts. Supplies climbed by 7.64 million, the industry-funded American Petroleum Institute said in Washington on Tuesday.
Gasoline inventories are predicted to have slid by 1.75 million barrels, extending seven weeks of decreases, the survey shows. Distillate supplies, including heating oil and diesel, were probably unchanged after gaining the prior three weeks to 113.2 million.
In Libya, a tanker docked at Hariga port as the eastern region prepared to export crude for the first time since July. The Aegean Dignity arrived yesterday and was set to start loading 1 million barrels, according to Mohamed Elharari, a spokesman at state-run National Oil Corp.
Hariga is one of four terminals seized last year by rebels seeking self-rule. Civil unrest has decimated production and shipments from Libya, the holder of Africa's largest crude reserves and a member of the Organization of Petroleum Exporting Countries.
"Oil is being driven more by the Ukraine situation," said Guy Wolf, global head of market analytics at Marex Spectron Group in London, by e-mail. "Does this situation mean more intense disagreements elsewhere as in the Cold War? In a tight market, such as WTI, anything can have an amplified effect."
Brent for June settlement rose 68 cents, or 0.6 per cent, to $110.04 a barrel on the London-based ICE Futures Europe exchange by 9:53 am London time. The volume of all futures traded was about 30 per cent above the 100-day average. Prices fell 0.7 per cent this year.
Chinese growth
China's economy expanded at the weakest pace in six quarters as risks mount of Premier Li Keqiang missing his government's annual growth target of 7.5 per cent. GDP advanced by 7.4 per cent in the January-to-March period from a year earlier, compared with a 7.3 per cent median estimate in a Bloomberg News survey of economists.
"The headline GDP data wasn't good," Sijin Cheng, a commodities analyst at Barclays Plc in Singapore, said by phone today. "Also the market has been preoccupied by all the geopolitics, the tensions. Given that context, the reaction has been relatively muted."
The Asian nation, the world's second-biggest oil consumer, will account for about 11 per cent of global demand this year, compared with 21 per cent for the US, according to the International Energy Agency in Paris.
Dismissing macro
"Oil prices have been quick to dismiss macroeconomics lately," said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark, by e-mail. "The tensions in Ukraine are the main driver for oil prices at the moment."
Ukraine's offensive yesterday marked its first foray against armed activists holding government buildings in cities near the Russian border. Interior Ministry units ousted pro-Russian activists who had seized the airfield in Kramatorsk. Efforts to contain the insurgency risk escalating tensions with the government in Moscow, which warned of a potential civil war.
Russia has 40,000 troops massed on Ukraine's border after its annexation of Crimea last month, the North Atlantic Treaty Organization said.
Oil stockpiles
Crude inventories in the US are forecast to have increased for the 12th time in 13 weeks, a separate Bloomberg survey shows before a report from the Energy Information Administration on Wednesday.
Stockpiles probably rose by 1.75 million barrels to about 385.9 million in the seven days ended April 11, according to the median projection of 10 analysts. Supplies climbed by 7.64 million, the industry-funded American Petroleum Institute said in Washington on Tuesday.
Gasoline inventories are predicted to have slid by 1.75 million barrels, extending seven weeks of decreases, the survey shows. Distillate supplies, including heating oil and diesel, were probably unchanged after gaining the prior three weeks to 113.2 million.
In Libya, a tanker docked at Hariga port as the eastern region prepared to export crude for the first time since July. The Aegean Dignity arrived yesterday and was set to start loading 1 million barrels, according to Mohamed Elharari, a spokesman at state-run National Oil Corp.
Hariga is one of four terminals seized last year by rebels seeking self-rule. Civil unrest has decimated production and shipments from Libya, the holder of Africa's largest crude reserves and a member of the Organization of Petroleum Exporting Countries.
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First Published: Apr 16 2014 | 10:33 PM IST