WTI futures swing ahead of supplies reports, easing Ukraine worries

West Texas Intermediate crude marked a minor advance after trading lower most of the day amid expectations a private and a government inventories reports will show a ninth consecutive jump in US crude supplies. Brent rose but remained close to yesterdays five-week low as expected US and EU sanctions against Russia turned out to be personal, leaving the countrys energy exports unaffected. Supply disruptions in Libya continued to provide support.

On the New York Mercantile Exchange, WTI crude for delivery in May was mostly unchanged by 8:02 GMT at $97.60 per barrel, up 0.08% on the day. Prices shifted in a daily range between $97.28 and $97.75 a barrel. The contract lost 0.95% on Monday and settled at $97.62, having touched a 5-1/2-week low of $97.00.

Meanwhile on the ICE, Brent futures for settlement in the same month rose by 0.31% and traded at $106.57. Prices varied between days high and low of $106.69 and $106.24 a barrel. The European benchmark shed 1.82% on Monday and settled at $106.24, the lowest close since February 4th, having touched an intraday low of $106.16 a barrel. Brent traded at a premium of $8.97 to its US counterpart after it closed at $8.62 on Monday, down from $9.84 on Friday.

Oil prices continued to ease as Western sanctions against Russia, which were initially feared that may have a negative impact on Moscows energy exports, targeted Russian and Crimean top officials, leaving oil shipments unaffected.

With receding fears that Crimeas separation from Ukraine would result in civil violence or a military campaign, market players attention turned to US inventories levels and upcoming economic data, including the outcome of FOMCs two-day meeting which begins today.

ANZ Research said in a note, cited by CNBC: “Initial U.S. sanctions were confined to a few select Russian and Ukrainian officials and allayed fears of any major supply disruptions to energy markets.”

US crude inventories

US crude oil inventories are expected to have jumped for a ninth consecutive week in the seven days through March 14th. According to a survey conducted by Reuters, crude supplies have probably jumped by 2.8 million barrels last week. Stockpiles rose by 6.18 million barrels in the week ended March 7th, sharply exceeding a projected 2-million increase, and reached 370.0 million barrels, the highest since December 13th.

The build was partially attributed to a drop in refinery utilization rates as units were shut for spring maintenance. Refineries operated at a four-month low of 86.0% of their operable capacity, down 1.4% from a week earlier.

At the same time, domestic crude production jumped by 1.3% to 8.18 million barrels per day last week, the EIA said, the highest since July 1988.

The industry-funded American Petroleum Institute will release its separate oil supplies report later in the day. APIs data however is considered as less popular than EIAs statistics as they are based on voluntary information from operators of pipelines, refineries and bulk terminals, while the government requires reports to be filed with the EIA.

Market players are awaiting the release of crucial economic data to assess the US economys recovery after the extraordinary cold winter season. Due later today are housing starts and building permits, coupled with consumer inflation.

Data yesterday showed US industrial production exceeded analysts expectations and expanded by 0.6% in February, compared to projections for a 0.2% growth after Januarys 0.2% contraction. The New York Empire Manufacturing Index also marked an improvement, albeit trailing analysts expectations.

Markets also awaited the outcome of FOMCs two-day meeting which begins today, where policy makers are broadly expected to keep Feds previous course and trim its Quantitative Easing program by another $10 billion per month.

Persisting supply disruptions in Libya continued to provide the oil market, particularly Brent, with limited support. The state-run National Oil Corporation said on Monday that nationwide output fell to 230 000 barrels per day after protesters demanding jobs and local development blocked a pipeline from Libyas second-largest oilfield, El Sharara. The African country, holder of the continents biggest crude reserves, pumped an average of 1.4 million barrels per day before the protests began last summer.