West Texas Intermediate crude rose for a third day amid speculation that Crimea’s vote to split from Ukrainemay heighten tensions between Russia and the West. Brent in London advanced.
Futures gained as much as 0.5 percent in New York. The U.S. and the European Union warned Russia not to annex Crimea after the referendum, setting the stage for sanctions against the world’s biggest energy producer. Libyan oil production fell after protesters closed a pipeline carrying crude from the Sharara field, according to Mohamed Elharari, a spokesman for state-run National Oil Corp.
“With the overwhelming pro-Russian vote in the region clashing with the West’s assertions that the referendum is not valid, expect further geopolitical risk-related support this week,” Mark Pervan, the head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note today.
WTI for April delivery climbed as much as 50 cents to $99.39 a barrel in electronic trading on the New York Mercantile Exchange, and was at $99.11 at 11:39 a.m. Sydney time. The contract rose 0.7 percent to $98.89 on March 14. The volume of all futures traded was about 23 percent above the 100-day average. Prices are up 0.7 percent this year.
Brent for May settlement rose 15 cents to $108.36 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $9.25 to WTI.
Brent advanced 1.1 percent on March 14, the most in almost two weeks, before yesterday’s poll where a total of 95.5 percent of voters in the Black Sea peninsula backed leaving Ukraine to join Russia. The Ukrainian government, the EU and the U.S. consider the vote illegal, while Russia said it “fully met international norms.”
“Markets are watching the situation very closely and are looking for any more developments,” Richard Mallinson, an analyst at Energy Aspects Ltd. in London, said yesterday. “If there are more aggressive moves by Russian troops, we’ll see a reaction in prices.”
U.S. President Barack Obama has signed an executive order authorizing financial sanctions, allowing Treasury Secretary Jacob J. Lew to take steps that may include freezing assets or blocking American companies or individuals from doing business with Russians, Ukrainians or others deemed a threat to Ukraine’s security. U.K. Foreign Secretary William Hague called the Crimea vote “illegal, unconstitutional and illegitimate.”
“If the EU has a strong reaction, we will have solid technical and fundamental reasons for an upward push” in oil and gas prices, said Tom James, Dubai-based managing director of Navitas Resources.
In Libya, production dropped to 230,000 barrels a day from 408,000 barrels a day after the disruption to output at the Sharara field, National Oil Corp.’s Elharari said yesterday. Protesters are seeking jobs and development projects for the local community.