Brent crude turned lower, and US crude pared gains on Wednesday on news that Ukraine's president-elect was working on a peace plan and that a meeting with Russia's leader this week in France was not being ruled out. Rising US distillate stockpiles pressuring heating oil futures and weak distillate profit margins in Northwest Europe also were cited by brokers and analysts as triggering the intraday reversal by crude futures.
Brent crude for July delivery was down 21 cents at $108.61 a barrel at 1:24 pm EDT (1524 GMT). Earlier it had risen to $109.50. US July crude was up 11 cents at $102.77 a barrel, having pulled back after reaching $103.69 immediately after the release of US oil inventory data showing crude oil stocks fell last week.
"There was short-covering ahead of the data, but some selling afterward, and the Ukraine news also helped trigger some selling," said Bill Baruch, senior market strategist at iitrader.com LLC in Chicago. The US Energy Information Administration (EIA) said US crude stocks fell by 3.4 million barrels last week as imports dropped, a bigger slide than the expected 300,000-barrel draw and the inventory drop reported by an industry group on Tuesday.
Crude stocks at Cushing, Oklahoma, delivery point of the US crude oil contract, also fell, declining 321,000 barrels, while total US imports of crude fell by 686,000 barrels per day (bpd) to 7.05 million bpd. US distillate inventories rose 2.01 million barrels, the EIA said, much more than the 400,000-barrel expected build. Gasoline stocks also rose, by 210,000 barrels.
US July heating oil was down 1.15 cents at $2.8543 a gallon after sliding to $2.8503. US July gasoline was down 0.43 cent at $2.9444 a gallon. Ukrainian President-elect Petro Poroshenko said it was possible he would meet Russian leader Vladimir Putin at commemorations in France this week marking the anniversary of the World War Two D-Day landings. Poroshenko said a peace plan he is working on to end violent clashes between separatists and government forces in Ukraine would include de-centralisation of power, a wide amnesty, and elections for local government.
The political turmoil in Libya that has curbed the Opec member's crude output, along with tension between Russia and Western powers over Ukraine, has been underpinning oil prices. In Libya, the eastern Hariga oil port remained closed on Wednesday even though protesting security guards had been paid their salaries, state oil firm AGOCO said. "There are a lot of impediments to any return to full production in Libya," said Michael McCarthy, chief strategist at CMC Markets in Sydney.
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