London: Brent crude oil fell below $108 a barrel on Thursday as tensions in Ukraine showed signs of easing, but the crisis in Libya and a jump in Chinese crude imports to a record high underpinned prices.
Front-month Brent, the international benchmark, shed 59 cents at $107.54 per barrel by 1328 GMT, after settling $1.07 higher on Wednesday.
US crude was 60 cents lower at $100.17 per barrel, having briefly dropped below $100 and notched its biggest daily percentage fall in a week. It had gained $1.27 in the previous session on data showing a surprise drop in US crude stocks.
The price differential between WTI and Brent widened to $7.38 a barrel, after it hit $6.56 in the previous session, its narrowest in two weeks.
“Things have dipped a little bit on the basis of slightly more positive signs or at least less worrying signs out of Ukraine,” Simon Wardell, an analyst at Global Insight, said.
Separatist rebels in eastern Ukraine rebuffed Russian President Vladimir Putin’s call for them to postpone a referendum on independence, casting a shadow over a possible chance to ease the crisis and rekindling political concerns that have buoyed Brent.
Putin’s surprise move on Wednesday and his announcement that Russian troops had withdrawn from the border with Ukraine have weighed on Brent, but caution remained in the markets as Nato and the White House said they were still waiting for evidence.
“The geopolitical concerns over Ukraine are not fully clear,” said Olivier Jakob, oil analyst at Petromatrix, referring to the volatile situation in the country.
LIBYA, CHINA SUPPORT BRENT Brent also found some support from the standoff in Libya, where rebels in the east boycotted the new prime minister and said they would keep two major terminals shut.
Optimism about higher Libyan exports had helped to put pressure on oil prices since the end of last month, when some oil ports shut since last year were reopened.
But Libyan production remains at just over 250,000 bpd, less than a fifth of the output around 1.4 million bpd in mid-2013.
“One week we think that the flows are going to come back and then they don’t come back, so it’s difficult to have a trending market when you have this uncertainty on Libya,” added Jakob.
Brent had received some support earlier in the session from Chinese data showing crude oil imports rose to a record 6.78 million barrels per day (bpd) in April, after slipping below 6 million bpd in March for the first time since November 2013.
The data also showed that total exports rose, against forecasts for a decline, offering some rare good news for China’s slowing economy.
Oil futures rose by more than $1 on both sides of the Atlantic on Wednesday after data from the US Energy Information Administration (EIA) showed an unexpected drop in US inventories in the week ended May 2, although total stocks remained close to record high levels.
Total stocks fell 1.8 million barrels last week, according to the EIA. Stocks fell 1.4 million barrels at the Cushing, Oklahoma, delivery point for the US futures contract, to their lowest since 2008.
