Crude oil futures on the New York and London markets were down slightly Mar. 31 after weekend talks between US Sec. of State John Kerry and Russian Foreign Minister Sergei Lavrov seemingly yielded little progress toward resolving the Ukraine conflict.
Concerns linger that the conflict could escalate, threatening oil and natural gas supply from Russia. Kerry and Lavrov said they will continue to work toward reaching an agreement. On Mar. 31, Russia said it would pull several hundred troops away from the Ukrainian border, but US officials said tens of thousands of Russian troops still remain in place.
Brent crude oil prices also could receive support from potential supply disruptions in South Sudan, analysts said, noting South Sudanese rebels say they plan to seize some oil fields. ANZ Bank estimated 160,000 b/d of oil production was at risk in Upper Nile oil fields.
South Sudanese rebels called the White Army reportedly want to force South Sudan President Salva Kiir to step down.
Looking at the markets overall, oil and natural gas prices ended the quarter with renewed strength after wobbling in the middle of March. Crude oil prices were influenced by various geopolitics factors and also US storage levels, said Ole Hansen, Saxo Bank analyst.
“The energy sector was supported by the continued drop in inventories at the US storage hub in Cushing,” along with ongoing supply disruptions in Libya and Nigeria, Hansen said. “Geopolitical uncertainty arising from the crisis in Ukraine leaves little appetite for selling at this stage.”
During the last full week of March, light, sweet crude oil on the New York market reached above $101/bbl.
“The main driver behind this positive performance can be found at the delivery hub for WTI crude oil futures in Cushing,” Hansen said.
Meanwhile, US gas in underground storage inventories slumped below 900 bcf, marking its lowest level since 2003. Hansen attributed the drop in gas inventories to heating demand during a severe winter.
The May natural gas contract declined 11¢ to a rounded $4.37/MMbtu. On the cash gas market, the Henry Hub price for Mar. 31 was unavailable.
Heating oil for April delivery dropped 2.6¢ to reach a rounded $2.93/gal. Reformulated gasoline stock for oxygenate blending for April delivery was down 2.65¢ to a rounded $2.91/gal.
In London, the May ICE contract for Brent crude delivery declined 31¢, closing at $107.76/bbl. The June contract also dropped 31¢ to $107.65/bbl. The ICE gas oil contract for April declined $8.75 to $894/tonne.
The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was $104.08/bbl on Mar. 31, declining 19¢.
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