NEW YORK: Brent and US crude futures jumped more than $1 a barrel yesterday on news that Ukraine forces engaged a Russian armoured column on Ukrainian soil.
Ukrainian artillery destroyed a “significant” part of a Russian armoured column that crossed into Ukraine during the night, President Petro Poroshenko told British Prime Minister David Cameron, according to the presidential website.
Russia, a major oil and natural gas producer, denied its forces crossed into Ukraine and accused Kiev of trying to sabotage deliveries of humanitarian aid.
“The market is keeping an eye out for any geopolitical tensions and that is why we are seeing this spike,” said Carl Larry, chief executive officer at consultancy Oil Outlooks in Houston.
“We have had a big run to the downside over the last couple of days so a lot of the shorts are getting nervous,” Larry added.
Ahead of the rally, Brent and US crude futures had posted modest gains attempting to stabilize after signs of faltering economic growth and ample global crude supply sent Brent to a 13-month low on Thursday and US crude to its lowest price since January.
Front-month October Brent crude was up $1.31 at $103.38 a barrel at 12.30pm EDT (1630 GMT), having reached $103.76.
The September Brent contract expired on Thursday and fell $2.27 to go off the board at $102.01, the lowest settlement for front-month prices since June 2013.
Brent’s premium to the US contract increased to $8.82 a barrel intraday yesterday, the widest spread since June.
US September crude was up $1.19 at $96.77 a barrel, after hitting $96.94.
Ahead of the US September contract’s expiration on August 20, the front-month’s premium to the October contract hit $2.02, up from $1.50 on Thursday based on contract settlements.
Reuters
