06 June 2014, News Wires – Brent nudged higher to hover just under $109 per barrel on Friday, but was set to post a second straight weekly fall on easing Ukraine tensions and ample supply.
Optimism that monetary stimulus in the euro zone will lift economic growth and fuel demand helped limit the recent losses.
Investors are eyeing key jobs data from the US to reinforce hopes that the world’s largest economy and oil consumer is on a recovery path.
Brent crude edged up $0.06 to $108.85 per barrel by Friday morning.
“The tension in Russia and Ukraine has eased somewhat post the Ukrainian elections,” Societe Generale head of commodities research Mark Keenan told Reuters.
“Market fatigue from the three-month long conflict has also eroded some of the risk premium associated with the issue,” he added.
France hopes that a gathering of world leaders in Normandy on Friday to mark the 70th anniversary of the Allied D-Day landings will bring a thaw in the Ukraine crisis.
French diplomats say President Francois Hollande hopes to get Russian President Vladimir Putin to at least shake the hand of Ukrainian president-elect Petro Poroshenko on the sidelines of the ceremonies, in what could represent a first step in defusing tensions.
On Thursday, the European Central Bank launched a series of measures to pump money into the sluggish euro zone economy.
News of the European stimulus measures and elevated overall crude inventories in the United States have widened Brent’s premium to settle at above $6 per barrel on Thursday.
Total crude inventories remain high in the United States although new pipeline capacities have drained stocks at West Texas Intermediate’s (WTI) delivery point in Cushing, Oklahoma.
WTI could come under further pressure as high refinery utilisation rates meant that there is little room to increase crude throughput, Keenan said, adding that this could widen its spread with Brent to about $10 per barrel.
“It’s likely that crude stocks are going to remain elevated for the foreseeable future and in turn they will tend to back out light sweet imports from the US in the future,” Keenan told Reuters