Brent Oil Extends Premium to WTI Following Additional Sanctions on Russia

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Brent Oil Extends Premium to WTI Following Additional Sanctions on Russia

Brent crude advanced as Russia suffered more sanctions over the crisis in Ukraine and armed militia attacked Libya’s parliament. West Texas Intermediate gained ahead of government report on stockpiles.

The European benchmark gauge added 0.8% to widen its premium to WTI. The US and its partners in the EU slapped Russia with more sanctions yesterday.

According to estimates from a Bloomberg survey, the Energy Information Administration will tomorrow release a report showing that US crude stockpiles surged 2.2 million barrels to 399.9 million, the largest gain since 1931.

“We’re trying to make sense of the latest headlines from Ukraine and Libya. The risks in both countries should keep a floor under the market, even when there are no new headlines,” said Michael Wittner, of New York-based Societe Generale.   

June settlement Brent increased 44 cents, or 0.4% to trade at $101.28 per barrel on the New York Mercantile Exchange. Futures soared $102.20 in intraday exchange. Traded volume was 4.5 lower than average.

The US oil was $7.70 discount to Brent at the close in comparison with $7.28 on Monday.

Yesterday, the US included in its sanction list Igor Sechin, chief executive officer of Rosneft together with other six persons and 17 firms with ties to Putin’s inner circles. The firms targeted in the new sanction list include InvestCapitalBank and Volga Group. The European Union added 15 persons on its list of economic measures, including Dmitry Kozak, Russian Deputy Premier.

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The US and Its EU allies accuse Russia of reneging on an agreement reached on April 17 in Geneva meant to de-escalate the crisis in Ukraine.

Strategist Rob Haworth of US bank Wealth Management said that Russia has to increase oil supplies to back its economy but needs US technology to do it.

There are concerns that that escalation of events in Ukraine would hamper production and push prices upwards, as Reuters reports.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com