Oil prices climb on tensions over Ukraine

21st March 2014, Comments 0 comments

Oil rose Friday on simmering tensions in Ukraine, but gains were tempered by the stronger dollar after the Federal Reserve hinted at an interest rate rise early next year.

New York's main contract, West Texas Intermediate (WTI) for delivery in April delivery, advanced 21 cents to $99.11 a barrel.

Brent North Sea crude for May gained 41 cents to $106.86 per barrel, from Thursday's closing level.

"The oil market is being driven higher by increased fears of a disruption in crude supplies following the expansion of US sanctions against Russia," said analysts at London-based brokerage PVM.

Traders are closely monitoring events in eastern Europe after Russia absorbed the Crimean peninsula following a controversial referendum slammed as illegal by the West.

US President Barack Obama announced Thursday expanded sanctions against Russian officials, and minutes later the Kremlin struck back with travel bans against US officials and lawmakers, including the leaders of both chambers of Congress.

Russia provides about a quarter of Europe's natural gas supplies, with a significant portion of that flowing through pipelines that cross Ukraine.

Traders fear that an escalation of the crisis would disrupt those supplies.

Analysts also noted that the new US sanctions targeted Russian billionaire Gennady Timchenko, a co-founder of Gunvor, a leading independent commodity trading company involved in the oil and energy markets.

"Gunvor is one of the world's largest commodity traders," CMC Markets Singapore said in a market commentary.

"Russian President Vladimir Putin is rumoured to have investments in the company and direct links to Timchenko's energy activities," it said.

New York oil prices had slid below $100 a barrel on Thursday as the dollar strengthened.

The dollar surged on Wednesday after Janet Yellen said a rate rise could come "around six months" after the Fed's stimulus programme ends.

Economists took that to mean an increase in borrowing costs in the first half of 2015, against previous forecasts of a hike in the latter part of the year.

With crude priced in dollars, a strengthening of the unit makes the commodity more expensive, dampening demand and prices.

burs-rfj/bcp/rl


© 2014 AFP

0 Comments To This Article