Oil prices dip on hopes of Ukraine crisis easing

SINGAPORE- Oil prices dipped in Asian trade Tuesday as reports of a partial withdrawal of Russian troops along the Ukrainian border raised hopes of an easing in the worst East-West standoff since the Cold War.

New York’s West Texas Intermediate (WTI) for May delivery dropped 28 cents to $101.30 a barrel in afternoon trade and Brent North Sea crude for May shed 13 cents to $107.63.

The Ukrainian defense ministry’s general staff spokesman Oleksiy Dmytrashkivskiy told AFP Monday that Russian forces have been “gradually withdrawing” from its border.

The United States said it would welcome any Russian move to pull its forces back, but did not confirm reports that Moscow had begun to do so.

Kenny Kan, market analyst at CMC Markets in Singapore, said the reported troop withdrawal by the Kremlin had eased concerns about a full-fledged military conflict between Russia and Ukraine, which would cause oil prices to soar immediately.

“The tapering of the geopolitical tensions may have… reduced the risk premium that has previously been pegged to the oil prices,” Kan told AFP.

Russia provides about a quarter of Europe’s natural gas supplies, with about 80 percent of those exports traveling through pipelines in Ukraine.

Russian troops are massed on the borders of eastern Ukraine, sparking fears about Moscow’s plans after its takeover of the Crimean peninsula last month.

Investors meanwhile are also digesting the latest Chinese manufacturing data released on Tuesday.

The official purchasing managers index (PMI) was 50.3 in March, the National Bureau of Statistics said in a statement, up from an eight-month low of 50.2 in February.

The market had expected the PMI to remain unchanged in March, according to a poll of economists by Dow Jones Newswires.
A reading above 50 indicates growth, while anything below signals contraction.