Oil climbs on Ukraine tensions, bright US data

29th August 2014, Comments 0 comments

Global oil prices rose on Friday, supported by renewed Russia-Ukraine tensions and bright US economic growth data, analysts said.

Brent North Sea crude for October added 42 cents to $102.88 per barrel in midday London deals.

US benchmark West Texas Intermediate for October delivery gained 57 cents to $95.12 a barrel.

Ukraine and the West said on Thursday that Russian troops are actively involved supporting pro-Kremlin separatists who have been fighting against Kiev's rule since April.

NATO said at least 1,000 Russian troops were on the ground in east Ukraine but Moscow insisted none of its soldiers were in the country.

The United States warned it was considering new sanctions against Russia over the latest development.

Desmond Chua, market analyst at CMC Markets in Singapore, said fresh sanctions "may then trigger further retaliatory measures that would weigh on the euro bloc".

The intensified standoff between the neighbours, seen as the worst East-West crisis since the end of the Cold War, has sparked fears of a full-fledged war.

Such a development could cause energy prices to surge as Russia is the world's number-two oil producer, and Ukraine is a key conduit for Moscow's gas exports to Europe.

Stronger-than-expected US economic growth data meanwhile raised hopes for stronger demand in the world's largest oil consumer.

The US Commerce Department said Thursday the country's economy expanded at an annual rate of 4.2 percent in the second quarter, revising upward its July estimate of 4.0-percent growth.

Chua said the latest figure has placed the world's biggest economy "on track for growth forecasts which could spur a quicker pace of (monetary) tightening".

The US Federal Reserve has previously signalled that it will only hike interest rates late next year, but market watchers say robust US economic data could shorten the central bank's timetable.

The oil market also gained ground this week on the back of elevated supply risks linked to rising tensions in Libya and Iraq.

© 2014 AFP

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