Brent crude traded near its lowest closing level in four days amid speculation that heightened discord between Russia and Ukraine following weekend elections won’t impact oil supply. West Texas Intermediate was steady before economic data.
Futures were little changed in London even as President-elect Petro Poroshenko said there will be an increase in the efficiency of operations against eastern separatists amid tensions with Russia, the second-largest net oil exporter. Consumer confidence in the U.S., the world’s biggest oil consumer, probably rebounded in May while services expanded at a reduced pace, according to economists surveyed by Bloomberg News before separate reports today.
“Since the start of the crisis, Ukraine has failed to be a strong price-leader for crude oil,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. “We’ve seen many weekends deemed to pose ‘Ukraine risk,’ only to find that risk written off when trading resumes.”
Brent for July settlement dropped 14 cents to $110.18 a barrel on the London-based ICE Futures Europe exchange as of 12:32 p.m. local time. The contract slid 22 cents to $110.32 yesterday, the lowest close since May 20. The volume of all futures traded was about 23 percent above the 100-day average. Price are up 2 percent this month.
WTI for July delivery was 31 cents lower at $104.04 a barrel in electronic trading on the New York Mercantile Exchange. Floor trading was closed yesterday for the U.S. Memorial Day holiday and transactions will be booked today for settlement purposes. The U.S. benchmark crude was at a discount of $6.12 to Brent on ICE, compared with $6.19 on May 23.
Ukraine elected a new president amid separatist violence that erupted after Russia annexed the Black Sea peninsula of Crimea in March. A pro-Russian movement has captured large swathes of the Donetsk and Luhansk regions. Ukraine is a conduit for Russian oil and natural gas supplies to Europe.
“There will be a sharp increase in the efficiency of anti-terrorist operations,” Poroshenko said in Kiev yesterday. In Moscow, Foreign Minister Sergei Lavrov warned that any escalation would be a “colossal mistake.”
“Russia seems content to at least postpone any further territorial ambitions in Ukraine,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, said by e-mail. “Maybe they are biding their time or maybe they have been deterred by sanctions” imposed by the U.S. and Europe, he said.
In the U.S., the Conference Board’s consumer confidence index probably climbed to 83 in May from 82.3 a month earlier, according to the median estimate of 52 economists surveyed by Bloomberg. The Markit Economics preliminary gauge of services, the largest part of the U.S. economy, is forecast at 54.5, down from 55 in April. Readings above 50 signal expansion.
“The data from the U.S. could be useful in forming the near-term direction,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “West Texas needs to clear $105.25 a barrel if we’re going to see higher levels.”
WTI has technical resistance along its 30-day upper Bollinger Band, data compiled by Bloomberg show. Futures halted advances in early March and mid-April near this indicator, at about $105.25 a barrel today.