15 April 2014, News Wires – Brent crude futures dropped below $109 per barrel following a six-week high, as investors looked ahead to a meeting in Geneva that they hoped would bring a political resolution to the escalating crisis in Ukraine.
The US and the European Union are considering further sanctions against Moscow after pro-Russian separatists on Monday ignored an ultimatum to leave occupied government buildings in eastern Ukraine.
Tightening of the sanctions is likely to depend, in part, on the outcome of the meeting in Geneva on Thursday that will involve the EU, the US, Russia and Ukraine.
“Talks are being arranged between Western powers, Russia and Ukraine to resolve the current crisis through diplomatic efforts, so there has been an easing of crude oil prices,” Phillip Futures investment analyst Tan Chee Tat told Reuters.
Brent crude fell $0.53 to $108.54 by Tuesday morning after rising by almost $2 to close at $109.07.
US oil dropped $0.71 to $103.34 per barrel, pressured by expectations of a rise in US crude inventories.
In a tense phone calls, US President Barack Obama told Russian President Vladimir Putin that Moscow would face further costs for its actions in Ukraine and should use its influence to get separatists in the country to stand down.
Obama also told Putin that Moscow’s actions in Ukraine were not conducive to a diplomatic solution.
The EU agreed on Monday to expand a list of people to target with sanctions for their suspected role in violating Ukraine’s territorial integrity. The EU could also hold an emergency summit next week to adopt further measures.
The geopolitical tensions were lending support to oil amid expectations of more supplies and rising inventories, Tan reportedly said.
Investors are watching developments in Libya where the government had still to take control of the eastern Zueitina oil port a week after an agreement with a federalist rebel group to reopen it along with the Hariga terminal.
US crude stocks likely rose by 1.8 million barrels in the week ended 11 April, a preliminary Reuters poll showed ahead of inventory reports due later Tuesday and Wednesday.
Iran said it was exporting 1 million barrels per day, much less crude than the International Energy Agency estimate of about 1.65 million barrels per day of sales in February.