Oil complex settles lower as Russia-Ukraine tensions ease

New York (Platts)--31Mar2014/358 pm EDT/1958 GMT

NYMEX May crude settled near flat Monday, down 9 cents at $101.58/barrel, with the rest of the complex lower as risk-on trade flow diminished on reports that Russia partially withdrew troops from its border with Ukraine.

ICE May Brent settled 31 cents lower at $107.76/b. The price action kept the Brent-WTI confined to a narrow range between $6.05-$6.67/b. The spread settled at $6.18/b, from $6.40/b on Friday.

"There was a reduction in tensions related to Ukraine and Russia and that led to a selloff in oil, and that was despite some initial upside momentum on economic data from Europe that could mean quantitative easing there," Phil Flynn, senior analyst at Price Futures Group, said.

In products, NYMEX April ULSD settled 2.59 cents lower at $2.9320/gal and April RBOB ended 2.65 cents lower at $2.9110/gal on both contracts' day of expiration.

"The crude complex started the week moving lower as talks between the US and Russia over the weekend relating to Crimea is helping to diffuse some of the tension and risk premium currently in crude prices," Matt Smith, commodity analyst at Schneider Electric, said in a note.

Tim Evans, commodity analyst at Citi Futures Perspective, said there was a lack of clear progress in weekend talks between the US and Russia over Ukraine, "although we do note at least some reports that Russia has reduced troop levels along the Ukrainian border describes as a completion of 'exercises'."

Ukraine on Monday reported a partial withdrawal of Russian troops from its border. The announcement came in the wake of a four-hour meeting in Paris between US Secretary of State John Kerry and Russia's Foreign Minister Sergei Lavrov that ended with an exchange of political proposals and an agreement to talk again soon, according to an AFP report.

Evans added that the decline in futures may have been limited by early estimates that OPEC production may have declined slightly during March as well as the downtrend in crude inventories at the NYMEX delivery hub at Cushing, Oklahoma, that still left NYMEX May crude as the least bearish element of the global petroleum complex.

Also Monday, the Institute for Supply Management's Chicago division said its purchasing managers index fell to a reading of 55.9 in March -- an eight- month low. Analysts said the Chicago reading can be a precursor to other global manufacturing indices due out in the coming days.

--Alison Ciaccio, alison.ciaccio@platts.com
--Edited by Katharine Fraser, katharine.fraser@platts.com

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