Oil up more than $2 on Ukraine worries

 04 Mar 2014 - 1:15


People walk past a currency exchange showing ruble rates in Moscow yesterday. The ruble plunged 2.9 percent to a record low against the dollar and Russian shares plummeted about 10 percent.

NEW YORK: Crude oil prices rose by more than $2 a barrel yesterday as tensions mounted amid Russian military intervention on the Crimean peninsula.
The UN Security Council announced it will hold its third emergency meeting on the Ukraine crisis yesterday, this time at Russia’s request, as Moscow tightens its hold on Crimea, diplomats said. 
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, global oil prices rose as investors pulled out of riskier assets like stocks.
Brent crude spiked to an intra-session peak of $112.39 per barrel, its highest since December 30, and was up $2.30 at $111.37 by 17.14 GMT.
US crude jumped as much as $2.63 to a high of $105.22 a barrel, before easing to $104.65. “There is a risk premium in the oil markets in anticipation of this situation turning into something worse than it is,” said Dominick Chirichella, senior partner at Energy Management Institute in New York.
Brent gained additional momentum yesterday after it pushed higher past a key technical point at $111.85 a barrel. That price marked a 61.8 percent Fibonacci retracement of a previous price fall. 
The stand-off in Crimea raised concerns over disruptions of Russian natural gas supplies to Europe, which would see 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, with storage about 20 percent above last year’s level at the main European gas hubs.
Russia exports around 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, official data showed.
Meanwhile, global stocks sank yesterday, as fears of a conflict between Ukraine and Russia sent investors fleeing to safe-haven assets like gold and the yen.
In afternoon deals, London’s benchmark FTSE 100 index fell 1.53 percent to 6,705.85 points and in Paris the CAC 40 dropped 2.01 percent to 4,319.30 points.
Frankfurt’s DAX 30 plunged more than 3.01 percent at one stage but later stood at 9,411.37 points, down 2.90 percent from Friday’s closing level.
Russian stocks plummeted, with the MICEX market closing down 10.79 percent and the other main equities index the RTS slumping 12.01 percent, and the ruble struck historic lows against both the dollar and euro, forcing the central bank to spring an interest rate hike.
Safe-haven assets were in demand, with gold surging to a four-month peak $1,326.50 per ounce, but later slid back to $1,344.25. “It’s the Crimean peninsula that is still dominating and its likely to for most of the day and however long this crisis goes on for,” said Alpari analyst James Hughes. 
“We are looking at the safe havens as the obvious movers especially in currencies with the Swiss franc and yen both moving ahead. Equity markets have taken a pretty big hit so far.”
The Swiss franc hit a 14-month high of 1.2104 francs to the euro, while the dollar sank to 101.37 yen as investors turned to the Japanese unit. Agencies


IMF team in Kiev today to talk aid

WASHINGTON: An International Monetary Fund team will arrive in Ukraine today to discuss conditions for urgent aid, after leading G8 countries blasted Russia for sending troops into Crimea.
The IMF’s 10-day “fact-finding mission” will discuss the reforms that would need to be put in place to allow the fund to be able to offer Kiev financial support, the world lender announced yesterday.
The mission comes as efforts mount to put together a support deal for the new Ukraine government, even as the United States and European leaders express outrage at Moscow’s deployment of troops into the country’s Crimea peninsula.
New Prime Minister Arseniy Yatsenyuk last week said he inherited a government with less than $500,000 in cash at hand and foreign exchange reserves at a low $15bn. The government has said it needs “at least $15bn” in outside aid to support itself and implement reforms this year.
But IMF Managing Director Christine Lagarde on Friday urged calm, saying there was now reason to panic over the state of the country’s finances.
She told CNBC television that she wants to deal with Kiev’s problems “from a purely economic and financial point of view—not from a geo-political point of view, which is another matter.” 
A team of European experts was already in Kiev yesterday to assess the situation, according to a European Commission spokesperson.
EC President Jose Barroso said yesterday the Europeans were working with the IMF on a support package. “There are some difficulties in that country to which we have to respond through emergency measures in the economic field,” he said.
The EC remains willing as well to offer political association with the European Union, including economic integration and a free trade deal, he said.
However, said a European source, “It is still the IMF that will assess the financial needs” of Ukraine. No EU member will act on financial support for Kiev without the IMF assessment, the source said.AFP