NEW YORK: Brent oil futures fell by $1 a barrel, touching 6-week lows on easing worries that tensions in Ukraine would escalate, while US crude oil rose ahead of the contract’s expiration.
Russian President Vladimir Putin signed a treaty on Tuesday making Crimea part of Russia, but said he did not plan to seize any other regions of Ukraine. Western sanctions imposed on Monday targeted individuals and not broad trade.
US crude oil stockpiles soared nearly 6 million barrels last week, more than double forecasts, as refinery utilization fell during a time of low seasonal demand, US Energy Information Administration data showed on Wednesday. But US crude oil for April rose modestly in spite of the build as traders covered short positions.
“US April crude is being supported by shorts that got caught and need to cover before Thursday’s contract expiration, causing the spread between April and May crude to get blown out,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
Brent fell 95 cents to $105.84 a barrel by 12:15 p.m. EDT (1615 GMT). It fell by $1.08 to an intra-day low of $105.71 per barrel, the lowest since Feb. 5.
US crude for April delivery rose 10 cents to $99.80 per barrel. US crude for May delivery, which will become the front-month contract on Friday, fell 18 cents to $98.70 per barrel.
Brent’s premium over US crude contracted to as tight as $6.83, its tightest point since March 11. It was last trading 62 cents tighter at $7.29 per barrel.
Also supporting US crude was a 989,000 barrel draw at the Cushing, Oklahoma, oil hub.
The operator of the Seaway pipeline, which takes crude from Cushing to the US Gulf Coast, said the conduit would be ready to double shipments as soon as late May, earlier than some analysts had expected.
This will drain stockpiles at Cushing and lend support to US crude prices, analysts say.
Markets were also waiting for a decision from the US Federal Reserve at about 1800 GMT. The central bank is set to again trim its bond-buying stimulus and will probably rewrite guidance on when it might eventually raise interest rates.