Oil prices slip after plane crash spike

rubbermarketnews_RMN_brent_crude_oil_05019 July 2014, News Wires – Oil prices eased in thin trade on Friday but notched their first weekly gain in a month due to heightened geopolitical risk after the downing of a Malaysian jetliner over eastern Ukraine and as Israeli ground troops advanced into Gaza.

The crash of the Malaysian plane came a day after the United States imposed sanctions on Russia’s biggest firms after what Washington saw as Moscow’s failure to curb violence in Ukraine, pushing oil prices up nearly 2% on Thursday.

Brent fell 65 cents to settle at $107.24 a barrel, reversing the previous day’s gains.

US crude slipped 6 cents to $103.13, after hitting a session high of $103.94 and closing $1.99 higher on Thursday, a surge that partly reversed three weeks of losses.

The rally stalled on Friday as investors cashed in from the biggest daily move in over a month.

“Going into the weekend, people want to take some money off the table now,” said Joseph Posillico, senior vice president of energy derivatives at Jefferies Bache in New York.

US crude was back above its 100-day and 200-day moving averages after pushing below the 100-day last week and below the 200-day on Tuesday. The drop below the 200-day was the first time since April.

“It seemed that people really aren’t going to be jumping to conclusions after the airliner was shot down, and things haven’t really escalated yet,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Russia is one of the world’s top producers and exporters of oil and gas. Any restriction on the supply of Russian fuel to the West was seen as likely to support oil prices.

Washington imposed sanctions this week on several Russian companies including Rosneft, Russia’s top oil producer. US President Barack Obama warned Russian President Vladimir Putin on Thursday of additional sanctions if Moscow did not change course on Ukraine.

Escalating tension in the Middle East ratcheted up the global risk premium as Israel intensified its ground offensive in Gaza.

Investors worried that a general conflagration could draw in neighbouring countries and affect oil supplies.

Alternatively, a cooling of tensions over the weekend could shift the focus back to oil market fundamentals.


– Upstream

About the Author