* U.S., Europe sanctions ease fears of supply disruptions -
* U.S. crude falls on expectations of inventory build
By Keith Wallis
SINGAPORE, March 18 Brent edged higher above
$106 a barrel on Tuesday, with bargain-hunting kicking in after
the benchmark fell nearly $2 in the previous session as there
seemed little likelihood of the Ukraine crisis interrupting
Russian oil supplies.
Crude prices had earlier rallied in advance of the reaction
by the United States and Europe to the outcome of the weekend
referendum on whether Crimea should join Russia.
But prices then dropped when U.S. and European sanctions
imposed on Monday targeted Russian and Crimea individuals and
not broad trade, leaving oil exports from the second largest
producer in the world untouched.
"Initial U.S. sanctions were confined to a few select
Russian and Ukrainian officials and allayed fears of any major
supply disruptions to energy markets," said ANZ Research in a
note on Tuesday.
Brent crude rose 30 cents to $106.54 per barrel by
0433 GMT after dropping $1.97 to close at $106.24. The May Brent
contract hit $106.16 a barrel on Monday, the lowest for a front
month since Feb. 6.
U.S. crude fell 13 cents to $97.95 after dropping 81
cents to close at $98.08 per barrel.
With Brent falling overnight to the lower end of its recent
trading range of $105-$110 per barrel, bargain-hunting was
inevitable, said Tan Chee Tat, investment analyst at Singapore's
With few signs that Crimea's vote to secede from Ukraine
would result in widespread violence, attention in the oil
markets turned to ample global supplies and worries about a
weakening demand outlook.
Oil prices have also been dampened by estimates that U.S.
commercial crude inventories were expected to have risen last
week by more than 2 million barrels, Tan said.
U.S. crude inventories rose by 2.8 million barrels on
average, according to a preliminary Reuters poll taken ahead of
weekly data reports that are set to be released Tuesday and
In the midst of the situation in Ukraine, the European Union
has begun discussing the need to reduce its reliance on Russian
energy, British Foreign Secretary William Hague said on Monday.
Hague also said more names could be added to the sanctions
list of 21 Russians and Ukrainians imposed by the EU, depending
in part on how Russia reacted to Crimea's application to join
Russia following the weekend referendum.
(Editing by Tom Hogue)