17 April 2014, News Wires – Brent oil steadied above $109 per barrel on Thursday, trading not far from a six-week high, as rising tensions in Ukraine kept the geopolitical risk premium on crude prices intact, while an upbeat view on US and Chinese demand supported the price.
With Russian troops massed on the border of Ukraine, prospects of defusing the crisis at talks in Geneva later in the day appear slim.
“There’s still risk premium built into oil prices from Ukraine, also coupled with expectations that demand out of the US and China largely looks positive in light of recent economic data,” OptionsXpress market analyst Ben Le Brun said.
China’s economy grew 7.4% in the first quarter, the lowest in six quarters but ahead of market expectations for an increase of 7.3%.
The data released on Wednesday was a relief for investors anticipating the worst in the world’s second largest economy and oil consumer, helping fuel gains in risky assets.
Brent crude for June delivery was off $0.07 at $109.53 per barrel by Thursday morning, mostly clinging onto gains made on Wednesday.
US oil for delivery in May rose $0.27 to $104.03 per barrel. The contract also touched a six-week high of $104.99 in the previous session.
US industrial production rose at a faster-than-expected clip in March, the latest sign the economy was gaining momentum.
The softer dollar was also backing gains in West Texas Intermediate crude after Federal Reserve chair Janet Yellen stressed the need for accommodative policy, citing persistently low inflation and economic slack.
The US central bank has kept its key rate near zero since the depths of the financial crisis in late 2008, and has bought more than $3 trillion in assets to help depress borrowing costs and stimulate economic growth amid a slow recovery.
“Yellen’s comments in terms of keeping interest rates at ultra low levels for quite some time should feed through to fundamentally stronger demand for oil,” Le Brun reportedly said.
US oil prices rose despite a sharp spike in crude stockpiles in the world’s biggest consumer last week.
Crude oil stocks rose 10 million barrels to 394 million barrels in the week ending 11 April, according to the Energy Information Administration (EIA), far more than the 2.3 million-barrel build expected by analysts.
Inventories were boosted in part by a 5.2 million-barrel build on the Gulf Coast, to the highest level since the EIA began collecting data in 1990.