21 March 2014, News Wires – Brent crude fell towards $106 per barrel on Friday, on track for a fourth weekly loss weighed down by a stronger dollar and seasonal slump in demand, while fresh US sanctions against Russia could inject a new risk premium into the market.
Brent rose on Thursday after Washington expanded sanctions to 20 more prominent Russians, including allies of Russian President Vladimir Putin, in the latest sign of mounting tensions over Moscow’s annexation of Crimea.
On Friday, Brent was down $0.20 at $106.25 per barrel by Friday morning, after settling $0.60 higher.
US crude was $0.38 lower at $98.52 per barrel.
Crude for May delivery, which became the front-month contract on Friday, had settled $0.27 lower. The US contract was headed for its third weekly loss.
“Brent has approached the lower band of its $105 to $110 trading range, which yesterday incentivised investors to come into the market. So we are seeing a bit of profit taking this morning,” Phillip Futures investment analyst Chee Tat Tan told Reuters.
“Also, the dollar has regained some momentum and this strengthening has hurt some external demand for crude oil,” Tan reportedly said.
The greenback was sitting around a three-week high thanks to a spike in US bond yields.
Against a basket of major currencies, the US dollar was trading at $80.161, not far from the high of $80.354, a level not seen since late February.
While the West has failed to impose broad trade sanctions against Russia over its annexation of Ukraine’s Crimea region, on Thursday the US moved to expand a sanctions list to include Russian billionaire Gennady Timchenko, co-founder of Swiss trading firm Gunvor and considered by Washington to be a close ally of President Vladimir Putin.
Gunvor, which had a turnover of $93 billion in 2012, grew rapidly by trading large volumes of oil from Russian state companies such as Rosneft at the end of last decade, but has since then ceded its leading positions and now focuses on trading in Europe and Asia.
“Timchenko activities in the energy sector have been directly linked to Putin. Putin has investments in Gunvor and may have access to Gunvor funds,” the US Treasury said in a statement.
The move forced Timchenko to sell his near 50% stake in the trading empire.
President Barack Obama threatened broad penalties against key sectors of Russia’s economy if Moscow moves deeper into Ukraine.
Senior administration officials said many parts of the Russian economy could be targeted, including energy, defence, mining and financial services sectors.
Meanwhile, European leaders will agree to expand a list of those subject to travel bans and asset freezes on Thursday but stop short of harder-hitting measures against Russia, biding their time to retain European Union unity and gauge Moscow’s reaction.