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Brent Gains for First Time in Three Days on Ukraine; WTI Rises

May 12 (Bloomberg) -- Brent rose for the first time in three days on concern the Ukraine crisis may disrupt oil supplies from Russia, the world’s biggest energy exporter. West Texas Intermediate increased after hedge funds cut wagers.

Futures rose as much as 0.8 percent in London. Pro-Russian groups hailed a large majority in favor of secession in a referendum in eastern Ukraine that was dismissed as illegitimate by the government in Kiev and its U.S. and European allies. The global oil market is sufficiently supplied and demand is “great,” according to Saudi Arabia’s Petroleum Minister Ali Al-Naimi.

“There is still a lit fuse in Ukraine,” Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark, said by e-mail. “The weekend’s unofficial referendum means that the geopolitical tensions will still be around when considering the longer term.”

Brent for June settlement climbed as much as 88 cents to $108.77 a barrel on the London-based ICE Futures Europe exchange and was at $108.73 at 11:39 a.m. London time. The contract slid 15 cents to $107.89 on May 9, capping a second weekly decline. The volume of all futures traded was about 2 percent above the 100-day average for the time of day.

WTI for June delivery rose 0.5 percent to $100.49 a barrel in electronic trading on the New York Mercantile Exchange. The U.S. benchmark crude was at a discount of $8.24 to Brent on ICE. The spread widened for a second day on May 9 to close at $7.90.

Ukraine Crisis

“The market is concerned about disruption of crude from Russia,” Gordon Kwan, the regional head of oil and gas research at Nomura Holdings Inc. in Hong Kong, said by phone. “We don’t see any reason why oil prices will weaken significantly given the situation in Ukraine. All the focus is on the upside.”

Voters in the Ukrainian city of Donetsk gave 90 percent backing for the breakaway plan, while in Luhansk, 94 percent to 98 percent supported autonomy with turnout at 75 percent, Russia’s state-run RIA Novosti reported.

Oil at about $100 a barrel is a “fair price for all” and the Organization of Petroleum Exporting Countries has no reason to change its output level, Saudi Arabia’s Al-Naimi told reporters in Seoul today. The 12-member group, which pumps about 40 percent of the world’s crude, will maintain production at about 30 million barrels a day in the near term, OPEC Secretary General Abdalla El-Badri said in separate comments on the International Energy Forum’s website.

Brent has technical resistance along its 200-day moving average, data compiled by Bloomberg show. Futures have halted intraday gains this month near this indicator, at about $109 a barrel today. Sell orders tend to be clustered around chart- resistance levels.

Money managers reduced net-long positions in West Texas Intermediate, the U.S. benchmark grade, by 9.4 percent to 299,543 in the week ended May 6, data from the U.S. Commodity Futures Trading Commission showed on May 9. It was the third straight drop.

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