Brent climbs above $108 after plane downed in Ukraine

Fri Jul 18, 2014 12:23am EDT

Related Topics

* Brent, U.S. crude climb on demand, renewed geopolitical risks

* Oil prices set for first weekly gain in four weeks

* Obama warns of further sanctions against Russia

* Libya calls for U.N. help to protect oil field, ports

By Keith Wallis

SINGAPORE, July 18 (Reuters) - Brent futures climbed above $108 a barrel on Friday, extending sharp overnight gains amid heightened geopolitical concerns after a Malaysian jetliner was shot down over eastern Ukraine.

Oil prices on both sides of the Atlantic surged about 2 percent on Thursday, recovering from a weeks-long decline, on news of the crash that came a day after the United States slapped sanctions on Russia's biggest firms for the first time after Moscow's failure to curb violence in Ukraine.

Brent climbed 42 cents to $108.31 a barrel by 0415 GMT after rising 72 cents in the previous session. U.S. crude rose 48 cents to $103.67 after closing $1.99 higher.

Both benchmarks were on track for the first weekly gain in four weeks.

"The news last night is the catalyst to push oil higher," said Jonathan Barratt, chief executive of Sydney commodity research firm Barratt Bulletin, referring to the downing of the Malaysian passenger plane that killed all 298 people on board.

The rebound in prices was stronger due to the "aggressive sell down" in oil since mid-June, he added.

Brent and U.S. crude were also supported by data from the United States and China earlier in the week that indicated an improving demand outlook in the world's top two oil consumers.

While data from China showed a slightly stronger-than-expected second-quarter growth of 7.5 percent and higher oil demand, a report from the United States showed a larger-than-expected draw in crude stocks of 7.5 million barrels last week.

"It does paint a bullish picture. We are now in an upswing phase," Barratt said.

Investors are now keeping an eye on the Ukraine situation and Libya for further trading cues.

"The turnaround in risk sentiment after a downgrading of the geopolitical risk premium over the past couple of weeks should see prices push higher from here," said ANZ in a note on Friday.

U.S. President Barack Obama warned Russian President Vladimir Putin on Thursday of additional sanctions on Moscow if it does not change course in Ukraine, a day after the U.S. imposed sanctions on a raft of companies including Rosneft , Russia's top oil producer.

In Libya, a protest by oil security guards continued at Brega port, halting oil production at state-run Sirte Oil Co. The country is producing around 555,000 barrels a day of oil, a spokesman for state-run National Oil Corp said on Thursday.

Libya has asked the U.N. Security Council for help to protect its oil installations, oil export ports and civil airports, warning that without more international assistance the North African oil producer could become a failed state. (Editing by Himani Sarkar)

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