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Oil gains slightly on Russia-Ukraine tensions


MARKETWATCH 7:51 AM ET 08/29/14


Crude-oil futures rose slightly in Asian trade Friday, supported by positive U.S. economic data and escalating tensions between Russia and Ukraine.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October (CLV4) traded at $94.81 a barrel early Friday London time, up $0.26 in the Globex electronic session. October Brent crude on London's ICE Futures exchange rose $0.32 to $102.78 a barrel.

U.S. quarterly gross domestic product numbers were revised to 4.2% growth from an earlier estimate of 4%. ANZ said in a report that the revision was particularly indicative of stronger U.S. oil demand.

Meanwhile, Ukraine on Thursday accused Russia of invading its territory. An official from the North Atlantic Treaty Organization said that more than 1,000 Russian troops were fighting with pro-Russian separatists in eastern Ukraine.

Separately, U.S. President Barack Obama has indicated the country has no immediate plans to escalate military operations against Islamic State extremists in Iraq or Syria, and is working on a broader strategy to protect its interests in the region.

Harry Tchilinguirian, head of commodity markets at BNP Paribas, said geopolitical risk premium in oil had deflated prematurely, leading to a price correction. International tensions remain an upside risk for oil prices, he said.

"In the interim, there is ample room for OPEC countries such as Saudi Arabia, currently producing around 10 million barrels a day, to cut back on output and support a price floor at around current levels," he said.

Tchilinguirian said the oil market is faced with a rangebound future "where any bounces in volatility are opportunities to sell into."

Nymex reformulated gasoline blendstock for September (RBU4) -- the benchmark gasoline contract -- rose 3 points to $ 2.7530 a gallon.

-Eric Yep; 415-439-6400; [e-mail]

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08-29-140751ET
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