18 July 2014, News Wires – Brent futures climbed above $108 per barrel on Friday, extending sharp overnight gains amid heightened geopolitical concerns after a Malaysian jetliner was shot down over eastern Ukraine.
Oil prices on both sides of the Atlantic surged about 2% on Thursday, recovering from a weeks-long decline, on news of the crash that came a day after the US slapped sanctions on Russia’s biggest firms for the first time after Moscow’s failure to curb violence in Ukraine.
Brent climbed $0.42 to $108.31 per barrel by Friday morning after rising $0.72 in the previous session.
US crude rose $0.48 to $103.67 after closing $1.99 higher.
Both benchmarks were on track for the first weekly gain in four weeks.
“The news last night is the catalyst to push oil higher,” Barratt Bulletin chief executive Jonathan Barratt told Reuters, referring to the downing of the Malaysian passenger plane that killed all 298 people on board.
The rebound in prices was stronger due to the “aggressive sell down” in oil since mid-June, he added.
Brent and US crude were also supported by data from the US and China earlier in the week that indicated an improving demand outlook in the world’s top two oil consumers.
While data from China showed a slightly stronger-than-expected second-quarter growth of 7.5% and higher oil demand, a report from the US showed a larger-than-expected draw in crude stocks of 7.5 million barrels last week.
“It does paint a bullish picture. We are now in an upswing phase,” Barratt said.
Investors are now keeping an eye on the Ukraine situation and Libya for further trading cues.
“The turnaround in risk sentiment after a downgrading of the geopolitical risk premium over the past couple of weeks should see prices push higher from here,” said ANZ in a note on Friday.
US President Barack Obama warned Russian President Vladimir Putin on Thursday of additional sanctions on Moscow if it does not change course in Ukraine, a day after the US imposed sanctions on a raft of companies.
In Libya, a protest by oil security guards continued at Brega port, halting oil production at state-run Sirte Oil Co.
The country is producing around 555,000 barrels per day of oil, a spokesman for state-run National Oil Corp said on Thursday.
Libya has asked the UN Security Council for help to protect its oil installations, oil export ports and civil airports, warning that without more international assistance the North African oil producer could become a failed state.