Futures dropped as much as 0.6 percent in London. The U.S. and its European allies urged Russia to help calm the Ukraine crisis after four-party talks produced an accord aimed at easing the worst standoff with Russia’s government since the Cold War. WTI’s discount to Brent shrank as President Barack Obama’s administration said it will postpone a ruling on the Keystone XL pipeline that would bring Canadian crude south to the U.S.
“The reaction in the market was overdone,” Tom James, managing director at consultancy Navitas Resources, said by phone from Dubai today. “The last thing Russia will do is to cut exports. The Ukraine tension is hyped up, but if I ask what the market is looking at, it is clearly monitoring that situation.”
Brent for June settlement declined as much as 64 cents to $108.89 a barrel on the London-based ICE Futures Europe exchange and was at $109.27 at 1:52 p.m. in London. The front-month contract rose 2.1 percent last week, the most since Feb. 7. The volume of all futures traded was about 74 percent below the 100-day average. Prices are down 1.4 percent this year.
West Texas Intermediate for May delivery, which expires tomorrow, decreased 17 cents to $104.13 a barrel in electronic trading on the New York Mercantile Exchange. The more-active June future was 12 cents lower at $103.25. Trading on both Nymex and ICE was closed on April 18 for the Good Friday holiday.
WTI, the U.S. benchmark crude, was at a discount of $6.02 a barrel to Brent for June. The spread closed on April 17 at $6.16.
After negotiations in Geneva on April 17, diplomats from Ukraine, the U.S., the European Union, and Russia called for illegal groups in Ukraine to disarm, return seized buildings to their owners and free occupied public places. In line with the pact, the government in Kiev prepared an amnesty law for pro-Russian protesters.
Shootouts in eastern Ukraine over the weekend led to calls for more U.S. economic sanctions against Russia. At least three people were killed in a clash in Slovyansk in eastern Ukraine, according to the Interior Ministry, while a senior security official accused Russia of exploiting the violence to prepare grounds for an invasion.
Russia’s ambassador to the U.S., Sergei Kislyak, said new sanctions against his country would amount to “the revival of the Cold War mentality” and would be counter-productive. The nation is the world’s largest energy exporter.
The U.S. government’s decision to delay a ruling on Keystone may push back until after the November midterm elections a decision on the $5.4 billion project that pits the president’s environmental supporters against labor backers who want construction jobs.
The State Department said on April 18 it would postpone making a recommendation until questions are resolved about the way the pipeline’s northern route through Nebraska was approved. The southern portion of the project began moving crude to the Texas Gulf Coast from Cushing, Oklahoma, in January.
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