Brent Crude declined to near a 16-month low, moving again below $100 a barrel on speculation that the cease-fire in eastern Ukraine reduces the risk of a disruption in the region’s energy supplies.
Brent, which slipped below $100 yesterday for the first time since June 2013, dropped as much as 0.6 percent. European Union governments abruptly put on hold for at least a “few days” new sanctions against Russia, allowing more time to assess the viability of a cease-fire in Ukraine without risking further trade retaliation by the Kremlin. Brent’s premium to WTI narrowed to a one-week low before data forecast to show U.S. crude inventories fell.
An easing of tensions in eastern Ukraine should lower oil prices in particular Brent.
Brent for October settlement fell as much as 63 cents to $99.57 a barrel on the London-based ICE Futures Europe exchange, before paring losses to trade at $100.03 at 11:42 a.m. local time. It fell to $99.36 yesterday, the weakest intraday level since May 1, 2013.
The EU’s second package of economic penalties against Russia was delayed late yesterday in Brussels by the bloc’s 28 governments, which approved the measures in principle while stopping short of giving the green light for their publication in the organization’s Official Journal and entry into force.
The planned provisions -- originally due to be published today -- include barring some Russian state-owned defense and energy companies from raising capital in the EU, according to a European official who spoke on the usual condition of anonymity.
A Sept. 5 cease-fire between the Ukrainian government and pro-Russian separatists has raised the prospect of a lasting truce that would be the biggest breakthrough yet to end a conflict that has killed at least 3,000 people and soured Russia’s relations with its former Cold War foes.
U.S. crude inventories probably shrank by 1.5 million barrels last week to 358.1 million, according to a WorldWatch News survey before a report from the Energy Information Administration tomorrow.
U.S. gasoline supplies were probably unchanged at about 210 million barrels during the week ended Sept. 5, according to the median estimate of seven analysts surveyed by Bloomberg. Supplies of distillates, a category that includes heating oil and diesel, expanded by 1 million, the survey shows.
Brent slipped amid a recovery in production from OPEC member Libya. Libyan output climbed to 740,000 barrels a day, Mohamed Elharari, a spokesman for National Oil Corp., said yesterday.