July 25 (Bloomberg) -- West Texas Intermediate crude traded near $102 and Brent climbed as the intensifying conflict in eastern Ukraine raised tension between Russia and the West.
Russia, the world’s biggest energy exporter, said U.S. accusations that it supplied anti-aircraft weapons to rebels in neighboring Ukraine were groundless. President Barack Obama said he expects the downing of the Malaysian Air jet in Ukraine to push European countries to enact tougher sanctions against Russia. WTI fell earlier on speculation that rising U.S. fuel supplies will prompt refineries to reduce processing rates.
“The latest Russian statements are giving the market a boost,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We will continue to move on headlines but the fundamentals remain bearish.”
WTI for September delivery fell 1 cent to $102.06 a barrel at 11:50 a.m. on the New York Mercantile Exchange. Futures touched $101, the lowest intraday price since July 16. The September contract is up 11 cents this week.
Brent for September settlement increased 88 cents, or 0.8 percent, to $107.95 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a $5.89 premium to WTI, up from $5 at yesterday’s close.
Malaysian Air Flight 17 was shot down on July 17 over rebel-held territory in eastern Ukraine, killing all 298 passengers and crew and deepening the worst crisis between the West and Russia since the end of the Cold War. Russia is the world’s biggest energy exporter.
The Obama administration on July 16 imposed sanctions on Russian companies to punish the country over its interference in Ukraine, limiting their access to U.S. equity and debt markets. The European Union is preparing to penalize Russia’s most senior spies and security officials and has laid out options for applying sanctions to banks.
U.S. gasoline supplies rose to a four-month high in the week ended July 18 as use slipped, Energy Information Administration data released July 23 show. Crude stockpiles at Cushing, Oklahoma, tumbled to the lowest level since November 2008, according to the Energy Department’s statistical arm.
“The gasoline picture looks pretty grim,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The drop in Cushing supplies was the dominant theme right after Wednesday’s report but the focus has changed. It’s the middle of the summer and gasoline supply is rising while demand is weak, which isn’t good for refiners.”
U.S. gasoline inventories rose 3.38 million barrels to 217.9 million last week, according to the Energy Information Administration. Supplies of distillate fuel, a category that includes diesel and heating oil, advanced 1.64 million barrels to 125.9 million, the most since October. A measure of gasoline consumption decreased by 265,000 barrels a day to 8.79 million, the least in six weeks.