11 March 2014, News Wires – Brent futures were steady on Tuesday and held above $108 per barrel as the worsening crisis over Ukraine stoked supply disruption fears despite concerns over demand growth from the world’s two biggest oil consumers which kept a lid on gains.
In the worst East-West standoff since the Cold War, Russia said the US had spurned an invitation to hold new talks on resolving the Ukraine crisis, the latest instance of attempts of finding a diplomatic solution stalling, Reuters reported.
The US will also begin previously planned military training exercises in the region.
Brent futures were unchanged at $108.08 per barrel by Tuesday morning, recovering from a earlier low of $107.83, Reuters reported.
The contract ended $0.92 down on Monday after two straight days of gains.
US crude inched $0.06 higher to $101.18 after settling at $101.12, its lowest since 14 February, according to the news wire.
“The market is driven by geopolitical factors rather than fundamentals, and it is therefore difficult to point to a clearer direction for prices,” Astmax Investment commodity fund manager Tetsu Emori told Reuters.
“There is some pressure from the weak Chinese economic data and as the weather pattern improves in North America.”
US crude inventories are expected to have risen last week as the bitter cold spell ends and as refiners take down plants for scheduled maintenance after meeting peak demand.
That forecast followed data from China showing a sharp drop in exports, pointing to weakness in economic activity.
Other risk assets such as Asian markets and base metals found their feet after a rocky ride the previous session, though uncertainty about the true state of China’s economy kept the mood brittle.
The pull and push factors are likely to keep the US benchmark trading between $98 and $105 per barrel, keeping the European benchmark about $7 more expensive, Emori reportdly said.
Oil is also drawing support from the worsening crisis in Libya. The North African nation stopped a North Korean-flagged tanker that had loaded oil from a rebel-held port, after naval forces briefly exchanged fire with the rebels, officials said.
But in a sign of the chaos and conflicting information typical for Libya, rebel leader Ibrahim Jathran denied in a televised statement that he had lost control of the oil tanker.
A preliminary Reuters poll taken ahead of weekly inventory reports from the American Petroleum Institute and from the Energy Information Administration showed crude stocks climbed 2.2 million barrels on average for the week to 7 March.
Gasoline inventories were down 2.2 million barrels. Distillate stocks, which include heating oil and diesel fuel, are projected to have fallen 1.1 million barrels.
Refinery utilization for the week ended 7 March was expected to have dipped 0.5 percentage points on average from 87.4% of total capacity in the preceding week in part due to maintenance programmes.