Global oil prices edged past $110 a barrel on Wednesday, shaking off slower economic growth figures in China and a potential resumption in Libyan exports as tensions mounted in Ukraine, www.upstreamonline.com reported.
Six armoured personnel carriers entered an eastern Ukrainian town on Wednesday carrying the Russian and separatist flags a day after Ukrainian forces launched a special operation against separatist militia in the Russian-speaking east.
The standoff raised concerns of an escalation after Russian President Vladimir Putin warned of the risk of civil war.
Brent crude for June delivery reversed early losses to trade up 70 cents at $110.06 by 1145 GMT, with the May contract having expired on Tuesday, while US crude for May delivery was trading up $1.04 at $104.79.
Brent’s premium to US West Texas Intermediate crude narrowed on Wednesday but remains at its widest in two weeks with the risk premium for the international benchmark growing as tensions escalate in Ukraine.
“The major factor … in the spread of Brent over West Texas appears to be the Ukrainian situation still,” the Chief Strategist at CMC Markets in Sydney, Michael McCarthy, said.
On Tuesday, the European Union scrambled for solutions to break its dependence on Russian gas and help supply Ukraine. Russia supplies 30% of Europe’s gas needs.
Fresh evidence of slowing economic growth in China, the world’s second-largest economy and oil consumer, had put pressure on oil prices during the Asian trading day.
China said its gross domestic product grew 7.4 per cent in the first quarter, the slowest pace in 18 months but slightly ahead of market forecasts of a 7.3 per cent rise.
“It’s not necessarily a negative for oil but it’s not providing the support that was anticipated,” McCarthy said.
A slowing economy dampened energy use in China as its implied oil demand fell 0.6% to 9.96 million barrels per day in the first quarter, forcing refiners to scale back crude runs and raise exports to trim high fuel stocks.
In Libya, the National Oil Corporation is due to export its first cargo from the reopened Hariga port this week after a deal to end months of closures at its main oil terminals.
Zueitina, the other port due to reopen, is still not under government control, however.
Investors were also awaiting weekly oil inventory data from the US Department of Energy’s Energy Information Administration due on Wednesday.
Data from industry group American Petroleum Institute on Tuesday showed that US crude inventories rose 7.6 million barrels in the week to 11 April, compared with analysts’ expectations for an increase of 2.3 million.