Brent dips below $110, but Ukraine tensions provide support

By Ron Bousso

LONDON (Reuters) – Brent futures fell below $110 a barrel on Tuesday but held near a six-week high as a pact to ease tensions in Ukraine weakened, while rising crude inventories of US crude oil has affected prices.

A four-party peace deal signed last week in Geneva to ease tensions in eastern Ukraine has had limited impact as pro-Russian separatists refuse to lay down their arms and withdraw from occupied government buildings, while Kiev and Moscow they accused each other of breaking the pact. .

US Vice President Joe Biden on Tuesday offered to support Ukraine’s economy and asked it to achieve energy security.

Investors fear an escalation of the crisis could lead to new Western sanctions against Russia and disrupt oil supplies from the key producer.

Brent crude was down 35 cents at $109.60 a barrel by 09:10 GMT, not far from a six-week high of $110.36 hit last week. U.S. crude fell 45 cents to $103.92.

“A lot of the tension in Ukraine is priced and will continue to support oil prices. We’ve been in a pretty wide (price) range and we’re near the top of the range, so if things don’t change significantly, we’ll go lower London said. Michael Hewson, CMC Markets analyst.

Investors around the world see the unfolding crisis in Ukraine as a threat to risk appetite and said financial markets remain vulnerable to more shocks.


Oil market participants are awaiting the latest inventory data from the United States to gauge the outlook for demand in the world’s largest consumer.

U.S. commercial crude oil inventories were estimated to have risen last week, while gasoline stocks fell, a Reuters poll showed. Taken ahead of weekly inventory reports from industry group the American Petroleum Institute (API) and the US Department of Energy’s Energy Information Administration (EIA), the survey estimated that crude stockpiles rose by an average of 2.7 million barrels for the week ending April 18.

Oil investors are also watching the progress of talks between Iran and world powers to end Tehran’s disputed nuclear program. President Hassan Rouhani’s government on Monday confirmed speculation that it has reshuffled the leadership of Iran’s atomic agency to sideline nuclear experts who oppose talks with the West over its nuclear program.

China’s March imports of Iranian crude rose by more than a third from a year ago, keeping imports in the first three months of 2014 close to levels seen before Western sanctions were imposed more than two years ago follow.

(Additional reporting by Manash Goswami; Editing by Muralikumar Anantharaman and Keiron Henderson)

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