Brent crude oil futures fell for the second straight session on Wednesday, dropping below $109 a barrel on an easing of fears that Russia’s incursion into Ukraine could lead to war.
Brent is now more than $3 below a two-month high hit at the start of the week following Russia’s seizure of Ukraine’s autonomous Crimea region, with prices having retraced all the gains seen on Monday.
U.S. crude for April delivery was down 40 cents near $103, after falling $1.59 on Tuesday. The U.S. contract hit its highest since Sept. 20 on Monday at $105.22. Its discount to Brent narrowed to as little as $5.59 on Wednesday, the smallest gap since October.
April Brent was down 70 cents under $109 a barrel, after ending $1.90 lower in the previous session. The contract hit $112.39 a barrel on Monday, its highest since Dec. 30. Crude held losses after data showed private payroll growth was less than expected in February.
Russian President Vladimir Putin pulled back troops from the Ukraine border on Tuesday,saying he would use force only as a “last resort”. Russia is the world’s largest crude producer and supplies a third of Europe’s gas.
Tensions remain elevated, however, with the Interfax news agency reporting Russian forces had seized two Ukrainian missile defence battalions in the Crimea region on Wednesday. The Ukrainian Defence Ministry was unable to comment immediately on the report.
The American Petroleum Institute’s weekly report on U.S. oil stocks showed a 2.6-million-barrel drop at Cushing. Stocks at Cushing have fallen more than 20 percent since the end of January, boosting U.S. crude prices as new pipeline projects help reduce a glut in the Midwest created by the U.S. shale oil production boom.
The Cushing drop overshadowed a 1.2-million-barrel increase in commercial crude oil inventories nationally, which was in line with analyst expectations.