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 Record-high stockpiles of crude oil in the United States revealed by
government data on Wednesday weighed on U.S. benchmark crude
futures, which are less susceptible to geopolitical risk and fears
of supply squeezes in Europe.
At one point both Brent and U.S. crude were down over a dollar a
barrel. In the end, Brent settled at $109.58 a barrel, 75 cents, or
0.68 percent lower, while U.S. crude settled $1.34, or 1.31 percent,
lower at $100.60.
U.S. crude oil futures were the first to fall over a dollar,
widening the Brent-WTI spread <CL-LCO1=R> to near a key level of
$9.35, but Brent prices soon followed lower, narrowing that spread.
The United States, Germany and Britain all indicated they would seek
further sanctions against Russia after separatists in Ukraine held
on to control of several towns and on Friday detained a bus carrying
international observers.
Russia meanwhile warned Kiev it would face justice for a "bloody
crime" in eastern Ukraine, where government forces killed five
separatists, and told Germany violence by Ukraine's army and "armed
radical nationalists" must cease.
"The Ukrainian situation is being overwhelmed by Wednesday's EIA
data (on inventories). That was bearish and I think you're still
continuing to see the effects of that," said Bob Yawger, director of
commodities futures at Mizuho Securities.
The Energy Information Administration data showed not only crude
inventories at record highs, but also fresh highs in oil production
and a dip in oil demand..
U.S. crude futures have slipped below their 200-day moving average
of $100.80 and in the absence of significantly increased
geopolitical risk could test the 100-day moving average figure of
$99.12 a barrel, analysts said.
Aside from the war of words over Ukraine, there were several other
factors that were supportive of Brent but not enough to turn futures
positive, analysts said.
"It's the reverse drag where WTI is keeping Brent from extending
upside. If it wasn't for the fundamentals of the EIA report, you
would see that Brent market extending upwards but it's not happening
with all this crude oil sitting here in the biggest consumer of
energy products in the world," Yawger said.
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In Libya, a rebel group that controls several ports in the east said
on Thursday it would not reopen the Ras Lanuf and Es Sider terminals
unless the government implemented its part of a deal to end an oil
blockade.
A wave of protests at oilfields, ports and pipelines in the OPEC
member has cut production to just 220,000 barrels per day (bpd) from
1.4 million bpd in the summer. Rebels in the east and the government
agreed over two weeks ago to reopen some ports.
"They have been in talks, but the ground reality is that there has
been no pick-up in exports from Libya," a trader with a Western
trading house said. "Nobody expected it to be quick, but hopes of a
smooth ramp-up in exports are fading."
In the North Sea, meanwhile, about a quarter of production from the
200,000 bpd Buzzard oil field in the North Sea has been cut. Buzzard
is Britain's biggest oilfield and the largest single contributor to
the Forties stream.
Money managers cut their net long U.S. crude futures and options
positions in the week to April 22, the U.S. Commodity Futures
Trading Commission said late on Friday.
(Additional reporting by
Christopher Johnson in London and Manash Goswami in Singapore;
editing by Jane Baird, David Evans, Meredith Mazzilli and Andre
Grenon)
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