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Brent Trades Near Two-Week High on Ukraine Tensions

Brent crude traded near its highest closing level in almost two weeks as heightened tensions between Ukraine and Russia fanned concern that energy supplies are at risk. West Texas Intermediate rose in New York.

Brent advanced 0.3 percent in London. Ukrainian President Petro Poroshenko called an emergency security meeting to defend against what he called a Russian “invasion” after separatists gained ground in intensified fighting in eastern regions. In Iraq, Kurdish forces regained control of the Ain Zala and Batma oilfields during an offensive against Islamic militants.

“Geopolitical tensions are having an impact,” Hans van Cleef, energy economist at ABN Amro Bank NV in Amsterdam, said in a report. “Prices may not be increasing, but nor are they declining.”

Brent for October settlement gained 35 cents to $103.07 a barrel on the London-based ICE Futures Europe exchange at 1:09 p.m. local time. It closed at $102.72 yesterday, the highest since Aug. 15. The volume of all futures traded was about 27 percent below the 100-day average for the time of day. The European benchmark crude traded at a premium of $8.97 to WTI on ICE, compared with $8.84 yesterday.

WTI for October delivery rose 18 cents to $94.06 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 2 cents to $93.88 yesterday, the highest close since Aug. 21. Prices have slid 4.4 percent this year.

Crude Supplies

France and Germany threatened President Vladimir Putin’s government with further sanctions after pro-Russian insurgents widened their attacks on government forces, taking several towns outside their strongholds of Donetsk and Luhansk, including near the Sea of Azov. The five months of unrest have sparked the worst standoff between Russia and its former Cold War foes in two decades and unleashed sanctions on both sides.

WTI is headed for a second monthly loss. Supplies at Cushing, Oklahoma, the delivery point for futures contracts, expanded by 508,000 barrels to 20.7 million last week, the Energy Information Administration reported yesterday. That’s the highest level since July. The U.S. is the world’s largest oil consumer.

Stockpile Data

Crude inventories nationwide fell by 2.07 million barrels to 360.5 million, the data showed. Supplies were projected to decrease by 2.5 million, based on the median estimate in a Bloomberg News survey of 10 analysts.

Gasoline stockpiles dropped by 960,000 barrels to 212.3 million, the EIA said. The country’s peak summer driving season, which started on Memorial Day in May, typically ends on Labor Day, which falls on Sept. 1 this year. Distillate fuels, including heating oil and diesel, increased by 1.25 million barrels to 122.8 million, compared with an estimate for no change.

The energy boom in Iraq, second-biggest member of the Organization of Petroleum Exporting Countries, has been threatened since the Islamic State took control of a vast swath of the country’s north and neighboring Syria in June. The militants have been fighting Kurdish forces known as Peshmerga, who recaptured two oil fields and mounted an offensive to retake the town of Zummar, Hisham al-Brefkani, head of the energy committee of Nineveh provincial council, said by phone today.

Libya may boost production to 1 million barrels a day by the end of the September, according to state-run National Oil Co. Output is projected to expand amid gains from the Sharara, Sarir, Waha and Harouge fields, according to Mohamed Elharari, a spokesman at National Oil. The OPEC member pumped 630,000 barrels yesterday, he said.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net James Herron, John Deane

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