NEW YORK, March 4 ― Crude prices rose more than US$2 (RM6.57) a barrel yesterday to the highest level since September as tensions over Russian military intervention on the Crimean peninsula rattled oil markets.
President Vladimir Putin's forces tightened their grip on the Crimea region of Ukraine yesterday. Ukraine said Russia was massing armoured vehicles there after Putin declared over the weekend that he had the right to invade his neighbour to protect Russian interests and citizens.
Ukraine said Russia deployed 16,000 new troops to Crimea since last week.
Russia is one of the world's biggest oil producers, and while analysts said it was unlikely Russian oil supplies would be disrupted by the Ukraine crisis, investors dumped riskier assets like stocks in favour of commodities like gold and oil.
The growing tensions sparked a stock plunge in Moscow. The Moscow bourse slumped 11 per cent and wiped out nearly US$60 billion of value off Russian companies.
US crude settled US$2.33 higher at US$104.92 a barrel, its highest settlement price in 5-1/2 months. Earlier in the session, US oil climbed as high as US$105.22 a barrel.
Brent crude settled $2.13 higher at $111.20 per barrel, after earlier spiking US$3.32 to US$112.39 per barrel, its highest intra-session peak since December 30.
The rise in US oil lifted oil products. New York ultra-low sulfur diesel, commonly known as heating oil, rose more than 6 cents to settle at US$3.0805. US gasoline RBOB rose more than 4 cents to settle at US$3.0203 per gallon.
“There was a risk-off trade across markets except for commodities like oil where there is the biggest potential to see a supply crunch,” Matt Smith, analyst at energy-consulting firm Schneider Electric.
Former Ukrainian president Viktor Yanukovych, a Russian ally, fled the country on February 21 after three months of street protests against his rule.
Ukraine began mobilising troops in the region over the weekend, alleging Russia's military intervention constituted a “declaration of war.”
Russian naval officials dispelled a report yesterday from the news agency Interfax that said Russian naval officials had ordered Ukrainian troops in Crimea to surrender by today or face a military assault, calling it “complete nonsense.” The market briefly rose on the news.
A leader in the Russian Parliament said yesterday that “for now, there is no need” to send armed Russian forces into Ukraine.
Brent gained additional momentum on Monday after it pushed higher past a key technical point at US$111.85 a barrel. That price marked a 61.8 per cent Fibonacci retracement of a previous price fall.
US factory activity rebounded from an eight-month low in February and consumer spending rose more than expected in January, supporting US oil.
A stronger US dollar capped gains in US oil and commodities priced in the dollar.
Russia produces about 10.4 million barrels of oil per day, and exports about 5.5 million barrels of crude oil per day.
Piped gas exports beyond the former Soviet Union totalled 15.8 billion cubic meters in January, US government data showed.
The stand-off in Crimea raised concerns over disruptions of Russian natural gas supplies to Europe, which would lead to a rise in demand for alternative fuels such as heating oil. The European Union gets roughly a quarter of its gas supply from Russia, about half of which is piped through Ukraine.
A relatively mild winter in Europe has reduced demand for heating fuel, however, and stockpiles stand about 20 per cent above last year's level at the main European gas hubs. ― Reuters
