March 24 (Bloomberg) -- West Texas Intermediate crude advanced for a second day and Brent traded close to a one-week high amid tension between the West and Russia over the annexation of Crimea.
WTI advanced as much as 0.7 percent in New York, reversing earlier losses of 0.4 percent. Brent and WTI rose on March 21 after Russia, the world’s largest oil producer, completed its annexation of Crimea from Ukraine. Hedge funds reduced their bets on rising WTI prices by the most in almost nine months in the week to March 18 as U.S. inventories climbed.
“Supply risks should still lend support to the oil prices,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said in a report. “If the West were to impose additional sanctions on Russia, this could – at least theoretically – curb Russian oil exports and justify a certain price premium.”
WTI for May delivery climbed as much as 72 cents to $100.18 a barrel in electronic trading on the New York Mercantile Exchange and traded for $100.06 as of 12:46 p.m. London time. The volume of all contracts traded was about 34 percent below the 100-day average. The U.S. benchmark was at a discount of $7.23 to Brent.
Brent for May settlement rose 36 cents to $107.28 a barrel on the London-based ICE Futures Europe exchange. Futures advanced 47 cents on March 21 to $106.92, the highest settlement since March 14. Prices have fallen 3.2 percent this year.
World leaders gathered in The Hague to discuss Ukraine amid growing concern over a Russian buildup on its neighbor’s border as pro-Kremlin troops seized a Ukrainian base in Crimea.
Leaders of the U.S., the European Union, China, Japan and others meet today, with President Barack Obama seeking to mobilize opposition to Russia’s incursion into Crimea. As Russian President Vladimir Putin completed the annexation of Crimea and the two sides exchanged sanctions, attention shifted to whether Russia would seek to claim other parts of Ukraine.
Oil fell earlier after a gauge of factory output in China, the second-biggest oil user after the U.S., weakened for a fifth month.
A preliminary China purchasing managers’ index for March from HSBC Holdings Plc and Markit Economics dropped to 48.1, lower than the 48.7 median estimate in a Bloomberg News survey.
“It has been clear for twelve months that manufacturing has been slowing in China,” Guy Wolf, global head of market analytics at Marex Spectron Group in London, said by e-mail. “Deflating a credit bubble is extremely hard to achieve in a measured way. The risks remain that it accelerates to the downside.”
Money managers cut net-long positions in WTI by 25,775 futures and options combined in the week ended March 18, U.S. Commodity Futures Trading Commission data show.
Hedge funds and other money managers cut bullish bets on Brent crude to their lowest level in a month, according to ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 135,202 lots in the week ended March 18, the London-based exchange said today in its weekly Commitments of Traders report.
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