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US oil slumps, but Brent benefits from Ukraine drama

Front-month Brent crude futures held on to gains ahead of the contract expiration on Thursday, while U.S. futures fell even as concerns about the crisis in Ukraine and a tightening global oil market kept prices near 2-1/2-week highs.

News of returning Libya supply provided pressure on oil crude futures, with the OPEC-member country's output at 300,000 barrels per day (bpd) with the El Feel field at full capacity and Wafa field back at work after protests ended in the west of the country, an official with the National Oil Corporation (NOC) said on Thursday.

Pump jacks and wells are seen in an oil field on the Monterey Shale formation where gas and oil extraction using hydraulic fracturing, or fracking, is on the verge of a boom, March 23, 2014 near McKittrick, California.
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Pump jacks and wells are seen in an oil field on the Monterey Shale formation where gas and oil extraction using hydraulic fracturing, or fracking, is on the verge of a boom, March 23, 2014 near McKittrick, California.

Expiring Brent crude for June was up 10 cents above $110 a barrel. Wednesday's close at $110.19 was the highest settlement since April 24. U.S. oil ended down 87 cents at $101.50 a barrel, not far from its highest since April 21 above $102. The U.S. June contract expires on Tuesday.

Crude oil stocks at the Cushing hub, delivery point for the New York Mercantile Exchange's (NYMEX) U.S. crude contract, fell 592,000 barrels in the week to May 9, the U.S. Energy Information Administration's (EIA) data released on Wednesday showed. But total U.S. crude inventories rose 947,000 barrels to 398.5 million barrels, as domestic production hit a 28-year high of 8.43 million barrels, the EIA said.


The exclusion this week of pro-Moscow separatists from talks amongst Ukraine's interim leaders on plans to give the eastern regions greater autonomy cast doubt over moves to defuse the political crisis in Central Europe. Energy ministers from Russia and the European Union are to meet May 19 to set a date for more talks with Ukraine to end a dispute over gas prices and avoid a potential interruption of energy supplies.

Also highlighting supply worries, OPEC oil producers will need to raise output in the second half of 2014 to meet global demand as China builds its strategic reserves and stocks in industrialized countries remain low, the International Energy Agency (IEA) said on Thursday.

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