[April 29, 2014]NEW YORK (Reuters) — Brent
crude oil prices fell almost $1.50 a barrel on Monday as Libya
prepared to resume exports from an eastern port, while the spread
versus U.S. futures abruptly narrowed after widening for two weeks.
Libya, a major producer, lifted force majeure at the eastern oil
port of Zueitina, paving the way to restart exports at a second port
after a deal with rebels to unblock major terminals.
"The Libyan news took the steam out of the Brent price rally that
had lifted nearby futures into the $110-111 region last week," Jim
Ritterbusch, president of Ritterbusch and Associates in Galena,
Illinois, wrote in a research note.
Oil traders also took in news that the United States slapped a third
round of sanctions on Russian individuals and companies to try to
stop President Vladimir Putin from fomenting rebellion in eastern
Ukraine. Igor Sechin, head of state energy company Rosneft, was one
of the seven powerful Russians sanctioned by the United States.
June Brent fell $1.46 to settle at $108.12 per barrel, while U.S.
crude reversed earlier losses to settle up 24 cents at $100.84.
Earlier in the session, U.S. crude had fallen as low as $100.33.
The falling Brent and rising U.S. crude narrowed the gap between the
two benchmarks <CL-LCO1=R> to $7.28 a barrel at settlement, after
the gap widened to more than $9 from nearly $3 over the previous two
weeks. Monday's move of nearly $2 in the Brent-WTI spread was the
biggest one-day gain this year.
With U.S. crude oil stocks at their highest level on record, some
analysts were perplexed by the relative strength in WTI.
"It just seems that the paper markets, as they often do, search for
direction out of the flimsiest piece of news," said Al Troner,
president of Asia Pacific Energy Consulting in Houston, Texas.
Physical oil markets remain "long and getting longer."
A Reuters poll released Monday afternoon forecast U.S. commercial
crude oil and products inventories to have risen again last week,
setting a fresh high since records began over 30 years ago.
Outside of the oil markets, U.S. stock markets moved slightly
higher, with the S&P 500 Index gaining 6 points to end the day
unofficially at 1,869.42, up 0.3 percent.
President Barack Obama has made it clear the United States will slap
sanctions on key sectors of the Russian economy, including energy,
if Russia launches military action against Ukraine.
In eastern Ukraine, pro-Moscow rebels seized the public buildings in
another town. Interfax news agency reported the mayor of a major
eastern city, Kharkiv, had been shot and was undergoing surgery.
Long-term concerns over mounting tensions between Russia and Ukraine
will continue to buoy Brent prices, analysts said.
"The Brent price is likely to find continued support from the
uncertainty over the way the situation will play out in east
Ukraine, and from the possibility of delivery outages," said Carsten
Fritsch, senior oil and commodities analyst at Commerzbank in
Russia's oil pipeline monopoly Transneft has said it is worried
Ukraine might take control of its oil product pipeline to Hungary.
(Additional reporting by Christopher Johnson in London, Florence Tan
in Singapore and Cezary Podkul in New York; editing by Dale Hudson,
Jason Neely, Peter Galloway, Andre Grenon and Matthew Lewis)