Brent, WTI Rise After Russia’s Annexation of CrimeaMark Shenk
West Texas Intermediate and Brent crudes climbed after Russia completed annexing Crimea, escalating the worst standoff with the West since the Cold War.
WTI rose 0.6 percent and Brent 0.4 percent. Russian President Vladimir Putin signed legislation needed to absorb the Black Sea peninsula and its port of Sevastopol from Ukraine. Futures retreated from the day’s highs after the Standard & Poor’s 500 Index slipped from a record.
“Crude is up on concern that Putin may decide over the weekend that areas of eastern Ukraine might also prefer to be part of Russia,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion.
WTI for May delivery advanced 56 cents to settle at $99.46 a barrel on the New York Mercantile Exchange. The April contract expired yesterday after dropping 0.9 percent to $99.43. The volume of all futures traded was 16 percent below the 100-day average at 2:30 p.m.
Brent for May settlement rose 47 cents to end the session at $106.92 a barrel on the London-based ICE Futures Europe exchange. Trading was 15 percent below the 100-day average.
Brent, the benchmark for more than half the world’s oil, closed at a $7.46 premium to WTI.
The U.S. announced additional sanctions yesterday targeting aides and associates of Putin, including billionaire Gennady Timchenko, co-founder of energy-trading company Gunvor Group Ltd. The broader sanctions marked an escalation of efforts to punish Putin and his associates for Russia’s move into Crimea. Russia is the world’s biggest energy producer.
The U.S. Treasury Department alleged that Putin has a direct financial interest in Gunvor. The company said that Putin has never had any ownership and Timchenko had already sold his entire stake to his partner, Torbjorn Tornqvist.
“Putin’s actions are getting more provocative,” said Dan Flynn, an energy market analyst at Price Futures Group in Chicago. “We may be swimming in supply, but I wouldn’t want to be short going into the weekend with all of the tension between Russia and Ukraine. Too much could go wrong.”
The S&P 500 climbed as much as 0.6 percent to 1,883.97 before retreating. Emerging-market equities increased on speculation that China, the world’s biggest oil-consuming country after the U.S., is loosening funding restrictions for property developers and banks.
U.S. unemployment claims last week were 320,000 after the previous week’s 315,000, the lowest back-to-back readings since late November, Labor Department data showed yesterday. Other data showed factories in the Federal Reserve Bank of Philadelphia region grew at a faster pace and the index of leading indicators gained.
“The market is very volatile right now because of the Russian news,” said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees about $115 billion of assets. “Better economic growth in the U.S. and Europe should tighten supply and send oil higher next quarter.”
U.S. crude stockpiles climbed 5.85 million barrels to 375.9 million last week, the most since November, Energy Information Administration data showed. Production rose to 8.215 million barrels a day, the highest rate since 1988.
“We might be up for the day but I believe the market will soon drop because of the fundamentals,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “Crude inventories continue to climb as we see big gains in U.S. production.”
Electronic trading volume on the Nymex was 357,126 contracts at 2:48 p.m. It totaled 529,376 contracts yesterday, 1.8 percent above the three-month average. Open interest was 1.61 million contracts, a six-week low.