19 March 2014, News Wires – Brent crude sat near a six-week trough below $106 per barrel on Wednesday as concerns eased about an escalation of the crisis in Ukraine and investors looked to an increase in US oil stocks.
Comments by Russian President Vladimir Putin that he did not want to split Ukraine after approving plans to make Crimea part of Russia helped ease concerns, while attention shifted to the US Federal Reserve’s policy decision later Wednesday.
“Investors appear to be moving beyond the crisis in Ukraine, but they do still have an eye on potential sanctions against Russia,” OptionsXpress market analyst Ben Le Brun told Reuters.
Brent for May delivery was down 1% at $106.78 per barrel by Wednesday morning, after settling $0.55 higher.
US crude for April delivery traded $0.25 lower at $99.45 per barrel. The contract had closed $1.62 higher on Tuesday.
“There’s a lot of second guessing going on about the situation in Ukraine. I think there is still an element of risk premium, especially in Brent,” Le Brun reportedly said.
An expected rise in commercial crude oil inventories in the US last week could weigh further on prices.
A Reuters poll of eight analysts taken ahead of the weekly inventory report from the US Department of Energy’s Energy Information Administration due on Wednesday showed a rise by 2.6 million barrels last week on average.
Stockpiles rose 6.2 million barrels in the week to 7 March, as imports increased and refineries slowed activity.
Data from the industry group the American Petroleum Institute showed crude inventories rose 5.9 million barrels in the week to 14 March.
The US central bank is widely expected to scale back its monthly bond-buying stimulus by $10 billion at the end of its Federal Open Market Committee meeting later Wednesday.
“The Federal Reserve meeting will take more of the centrepiece today, and I think that a $10 billion reduction in the stimulus programme is largely built in to oil market,” Le Brun said.
The policy review will be the first presided over by Fed Chair Janet Yellen.
Also weighing on the oil price is news out of Iran where oil was exported at levels higher than allowed under Western sanctions for a fourth straight month in February.
Ship loading data obtained by Reuters showed top clients again bought more than 1 million barrels per day from the nation.
The rise in sales to Iran’s main clients, mostly in Asia and including Turkey, comes after a temporary agreement that eased some of the sanctions aimed at undermining the OPEC member’s nuclear program.