SAN FRANCISCO (MarketWatch) — Oil prices traded lower Monday as investors discounted prospects for harsh sanctions against Moscow after the Crimea region's vote to leave Ukraine and join Russia.
Mostly upbeat U.S. economic data, which buoyed the energy-demand outlook, kept oil's losses at a minimum.
Crude oil futures for April delivery (CLJ4) fell 28 cents, or 0.3%, to $98.61 a barrel on the New York Mercantile Exchange.
On ICE Futures, May Brent crude (UK:LCOK4) , Europe's benchmark oil, lost 90 cents, or 0.8%, to $107.31 a barrel.
"With Europe dependent on Russian exports for roughly 30% of its oil and natural gas and Russia dependent on earnings from those exports, the market at this stage is not anticipating that sanctions against Russia will include a halt to oil and gas purchases," said Addison Armstrong, senior director for market research at Tradition Energy in Stamford, Conn.
Reuters A woman holds a Russian flag Sunday as she casts her ballot during the referendum on the status of Ukraine's Crimea region at a polling station in Bakhchisaray. Crimea's Moscow-backed leadership formally asked to join Russia after the Sunday referendum, in which 97% of voters backed seceding from Ukraine.
The European Union has adopted sanctions against 13 Russian officials and eight Crimean officials in response to the referendum, The Wall Street Journal reported. The White House has also announced sanctions against seven Russian government officials and two Crimea-based separatist leaders and former Ukraine President Viktor Yanukovych and his presidential chief of staff.
There hasn't been any real move from the expected Crimea news, said Tariq Zahir, managing member at Tyche Capital Advisors.
"Supply is the main focus [and] Iraq has been pumping out very high levels it hasn't seen in years," he said, adding that production by the Organization of the Petroleum Exporting Countries is running above its quota. OPEC's output rose to 30.11 million barrels a day in February, according to a Platts survey of OPEC and oil industry officials and analysts released earlier this month.
"Sanctions will have to be watched in response to Russia, but we feel the overall sentiment is lower on higher supplies and [expectations for a crude-supply] build in the weeks to come — which would translate to lower prices," said Zahir.
U.S. stocks fell last week and global equities were under pressure in the runup to the Crimea vote. Analysts said global markets will be paying close attention to the West's response to developments in Ukraine. U.S. equities rallied on Monday in the wake of mostly upbeat economic data.
U.S. industrial production in February grew at the fastest monthly rate in six months, while an index of manufacturing conditions in the New York region showed modest improvement in March. A gauge of confidence among home builders ticked up in March.
Nymex oil futures fell nearly 4% last week as investors weighed the potential impact of the Crimea crisis versus continued signs of a slowdown in China.
On Monday, April natural gas (NGJ14) was the lone gainer among the major Nymex energy futures, with the contract up 12 cents, or 2.8%, to $4.55 per million British thermal units. April gasoline (RBJ4) traded at $2.93 a gallon, down 3 cents, or 1.1%, while April heating oil (HOJ4) edged down by 2 cents, or 0.7%, to $2.92 a gallon.
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