Oil prices jumped on April 8 on spiking geopolitical tension as activists in Ukraine's eastern provinces pushed for a referendum on seceding from Ukraine and joining Russia. Groups of people took over a regional government building in Donetsk on April 6, declaring an independent republic. They then requested assistance from Russia, calling for Russia's military to come and ensure the peace. Western powers denounced the move as an orchestrated event on behalf of the Kremlin. Secretary of State John Kerry warned Russia not to make any more hostile moves in Ukraine. Oil prices closed sharply up on April 8. Brent prices were up 1.68% to $107.60, and WTI crude jumped by 2.11% to $102.56.
Also adding to prices was speculation that U.S. crude inventories in Cushing, Oklahoma declined for a 10th consecutive week.
The price increase came on the heels of good news coming out of North Africa earlier this week. Libyan rebels came to an agreement with the central government in Tripoli, potentially leading to a large supply of oil returning to the global market.
Related Article: Ukraine Standoff Escalates, Could South Stream be in Doubt?
Meanwhile, the EIA revised upwards its price forecast for WTI for the year. EIA now predicts that WTI prices will average $95.60 per barrel, up from its previous estimate of $95.33.
Although there are market jitters this week, OPEC's Secretary-General Abdalla El-Badri said on April 8 that global markets have enough oil to go around. "At present we see the oil market as well supplied," El-Badri said today at a speech at an energy-awards event in Doha. "Supply is meeting demand and prices have been stable." He issued the statement despite the fact that the OPEC basket - a weighted average price of cartel's 12 members - has stayed above $100 for a record 200 days according to Bloomberg.
By James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also… More