Oil climbs higher on Ukraine uncertainty

16th May 2014, Comments 0 comments

Oil prices advanced Friday as the market won support from the ongoing Ukraine crisis and upbeat data in the United States, which is the world's top crude consumer.

Brent North Sea crude for July rose 28 cents to trade at $109.37 per barrel approaching midday in London.

The US benchmark, West Texas Intermediate (WTI) for delivery in June, added 18 cents to $101.68 a barrel.

"The political uncertainty in Ukraine continues to dominate the oil market, providing further support to crude oil prices," said analyst Myrto Sokou at the Sucden brokerage in London.

"Furthermore, the solid US economic data indicates the US economic recovery is picking up pace."

The United Nations warned Friday of an "alarming deterioration" of human rights in eastern Ukraine, where the government is battling an insurgency by armed pro-Russian separatists.

Kiev's interim leaders have for a month been waging a military offensive against the separatists who took up arms against the central government after the ouster of the Kremlin-backed president in February.

Any escalation of the conflict could severely disrupt energy supplies and send prices soaring, analysts say, because Ukraine is a vital conduit for Russian oil and gas exports to Europe.

However, Friday's oil market gains were capped by abundant US crude stockpiles and news of poor first-quarter economic growth in the eurozone.

In the United States, data showed this week an oversupply of crude stocks, putting downward pressure on prices. The Department of Energy said Wednesday that stockpiles rose 900,000 barrels in the week ending May 9.

And in Europe, official data showed Thursday that gross domestic product across the 18-nation eurozone grew just 0.2 percent in the three months to March. That was half expectations for expansion of 0.4 percent.

Oil traders also shrugged off a modest upgrade to 2014 oil demand growth from the International Energy Agency.

The IEA raised its 2014 forecast by 65,000 barrels per day to 92.8 million barrels, largely because of unexpectedly strong first-quarter demand driven by US consumption.

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© 2014 AFP

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