West Texas Intermediate Crude futures swung slightly between gains and losses early Friday, keeping the US benchmark ready to post its worst weekly slide in ten.
Cautious sentiment is still dominating the oil markets amid worries over China`s economic recovery and rising U.S. stockpiles. But focus shifts into the Ukraine crisis as the US attemps to increase pressure on Moscow ahead of a vote Sunday in Crimea on whether it should leave Ukraine and return to Russia.
Although the risk of military confrontation has slightly ebbed down amidst the latest international efforts made to contain the Ukraine crisis, the threat of Western sanctions Over Russia is keeping markets on high alert, but any short-term gains limited so far.
As of 04:18 a.m. ET:
- WTI crude was up 0.15% at $98.36 a barrel
- Brent Crude was up 0.29% at $107.70 a barrel
The oil markets is still digesting the recent rout triggered by news that Washington announced an unexpected plan for a test release of strategic oil reserves, while weekly data showed a sharp increase in crude stockpiles.
On Wednesday, the U S announced it will hold its first test sale of rude from its emergency oil stockpile since 1990 -- news that helped ease fears of any possible disruption in supply if the crisis between Russia and Ukraine intensities.
Concerns over slowdown in oil demand is still evident in the markets, especially amdst the stream of downbeat data from China, the world`s top oil consumer. However, traders continue to weigh the impact of cold winter on gas storage, while risks from the unfolding crisis in Ukraine are keeping prices in check for the mean time.
On Thursday, the Energy Information Administration (EIA)`s weekly report yet offered a gloomier outlook for oil demand, showing that stockpiles of crude surprisingly rose 6.2 million barrels last week, its biggest weekly increase since the week ending Jan. 24.
The EIA report kept the led on any price gains, and infect weighed heavily on the U.S. crude prices.
The flow of economic data from the US economy was quite upbeat yesterday, offering some sort of relief to oil traders, believing this positive feedback will prompt the Federal reserve to pause the tapering of its monetary stimulus program.
More, the benchmarks drew some support from the slightly improved outlook from world oil demand by the Organization of the Petroleum Exporting Countries (OPEC), raising its forecast for a second straight month as economic growth accelerates in Europe and the US.
The OPEC said global demand will rise by 1.14 million bpd in 2014, compared with 50 thousand bpd projected a month ago.
Meanwhile, global markets remain highly alerted, with little hope of halting a vote to separate a strategic Ukraine peninsula from the rest of the country, as Western officials urge Russia to start diplomatic talks with Kiev as a way of de-escalating the tension.
The Crimea vote on Sunday, much expected to result in breaking away from Ukraine, was described by Washington and European Union as violation to the international law and Ukraine`s constitution.