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West Texas Intermediate crude rallied for a third day in the middle of floating assumptions that Crimea’s vote to split from Ukraine may fires up tensions between Russia and the West. Brent was steady in London.
Futures spiked up as much as 0.5 percent in New York. The U.S. and the European Union warned Russia not to annex Crimea after the referendum, setting the stage for penalties versus the world’s largest energy producer. Libya’s production sagged down after protesters closed a pipeline carrying crude from Sharara, the country’s second-biggest field, according to state-run National Oil Corp.
“With the overwhelming pro-Russian vote in the region clashing with the West’s assertions that the referendum is not valid, expect further geopolitical risk-related support this week,” Mark Pervan, the head of commodity research at Australia & New Zealand Banking Group Ltd., stated in a note today.
WTI for April delivery hike as much as 50 cents to $99.39 a barrel in electronic transaction on the New York Mercantile Exchange and was at $99.11 at 2:03 p.m. Sydney time. The contract bolstered 0.7 percent to $98.89 on March 14. The volume of all futures exchanged was about 15 percent above the 100-day average. Financial values are up 0.7 percent this year.
Brent for May settlement skyrocketed 10 cents to $108.31 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $9.65 to WTI for the same month.
Ukraine Crisis
Brent move 1.1 percent higher on March 14, the most in almost two weeks, before yesterday’s referendum. A total of 95.5 percent of voters in the Black Sea peninsula backed leaving Ukraine to join Russia, preliminary outcomes display. The Ukrainian government, the EU and the U.S. consider the vote illegal while Russia said it “fully met international norms.”
“If there are more aggressive moves by Russian troops, we’ll see a reaction in prices,” Richard Mallinson, an analyst at Energy Aspects Ltd. in London, said yesterday. “Markets are watching the situation very closely.”
U.S. President Barack Obama has signed an executive order granting monetary penalties, allowing Treasury Secretary Jacob J. Lew to take steps that may include freezing assets or blocking American firms or individuals from doing business with Russians, Ukrainians or others deemed a threat to Ukraine’s security. U.K. Foreign Secretary William Hague called the Crimea vote “illegal, unconstitutional and illegitimate.”
‘Upward Push’
“If the EU has a strong reaction, we will have solid technical and fundamental reasons for an upward push” in oil and natural gas prices, said Tom James, the Dubai-based managing director of Navitas Resources.
In Libya, crude output slumped to 230,000 barrels a day from 408,000 barrels a day after the disruption at Sharara, Mohamed Elharari, a spokesman at National Oil, declared yesterday. Protesters are looking for jobs and development projects for the local community.
Libya, an affiliate of the Organization of Petroleum Exporting Countries, holds Africa’s largest oil reserves. The nation pumped 350,000 barrels of oil a day last month, according to estimates gathered by Bloomberg.
