April 24, 2014 / 2:51 AM / in 4 years

Brent climbs, stays above $109 on Ukraine tensions

* Russia says it will respond if its Ukraine interests attacked

* U.S. crude oil inventories rise to highest on record -EIA

* Iraq’s southern oil exports on track for record in April

* Brent to rebound to $109.66 -technicals

By Manash Goswami

SINGAPORE, April 24 (Reuters) - Brent futures rose on Thursday as Russia vowed to respond if its interests in Ukraine came under attack, stoking fears of an escalation in tensions that have pushed the oil benchmark up 5 percent this month to hover above $109 a barrel.

Russia accused the United States of being behind the political upheaval in Ukraine, now in its fourth month, which has dragged Moscow’s relations with the West to their lowest since the Cold War.

But price gains were capped as oil stockpiles in the United States rose to a record.

Brent crude had climbed 19 cents to $109.30 a barrel by 0217 GMT, after settling 16 cents lower. The contract has ended above $109 for the fourth straight day and has held near a six-week high. U.S. oil increased 22 cents to $101.66, after settling 31 cents lower.

“The immediate demand-supply dynamic is negative, but Ukraine is the wildcard that is stopping the market from declining further,” said Ric Spooner, chief analyst at CMC Markets. “For the near term, I see markets largely neutral, trading in a range with a downward bias.”

NATO says Russia has built up a force of about 40,000 troops in its border with Ukraine. Moscow says some are stationed there permanently, while others have been deployed as a precaution to protect Russia from the instability in Ukraine.

A further escalation could lead to damaging economic sanctions, and raises the risk of a disruption to the Russian gas supplies on which Europe depends. The region is not key to global oil supplies, but investors are worried a sudden turn in events for the worse could rattle markets.

But putting a lid on prices is overnight data from the Energy Information Administration (EIA) that showed crude stocks in the world’s top oil consumer rose last week to their highest levels since records began in 1982.


Crude inventories climbed by 3.5 million barrels in the week ending April 18, more than analyst expectations of a 2.3 million-barrel build. At 397.7 million barrels, they are at their highest since 1982, when the EIA began collecting data.

The previous peak was reached in May 2013 at 397.6 million barrels. With oil production at its highest level since 1988 and the export of crude severely limited, crude oil inventories have been broadly edging higher.

Gains are also getting capped by rising shipments from key Middle Eastern exporter Iraq. Oil exports from the country’s southern terminals are heading for a record high in April, according to loading data and industry sources.

Exports from Iraq’s southern terminals have averaged 2.55 million barrels per day (bpd) in the first 23 days of April, according to shipping data tracked by Reuters. An industry source, who also monitors the exports, had a similar estimate.

If that is sustained for the rest of April, southern exports this month would top February’s level of 2.50 million bpd, the highest since 1979.

An improving supply outlook and simmering geopolitical risk factors will see Brent trading around its 200-day moving average of $108.90 a barrel and the U.S. benchmark around $100.80 in the near-term, Spooner said. (Reporting by Manash Goswami; Editing by Joseph Radford)

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