Crude-oil futures surged in Asian trading hours Monday after Russia seized Ukraine's Crimean peninsula by force over the weekend, offsetting any impact from weak manufacturing data from China.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $103.78 a barrel at 0519 GMT, up $1.19 in the Globex electronic session. April Brent crude on London's ICE Futures exchange rose $1.62 to $ 110.69 a barrel.
Russia's parliament authorized President Vladimir Putin to use military force in Ukraine over the weekend, raising fears of an imminent conflict, but analysts say oil and gas supplies from Russia to eastern Europe have not yet been affected.
Russia is the second-largest producer of natural gas and third-largest liquid fuels producer in the world, much of it supplied to European countries via Ukraine, according to the U.S. Energy Information Administration.
Ukraine is an important transit country for Russian energy supplies and in the past, disputes have resulted in interruptions gas exports through Ukraine, the agency says.
The latest crisis has driven up oil prices and triggered some stop-loss buying, Ken Hasegawa, commodities sales manager at Tokyo-based Newedge Japan said. "For now oil prices have gained slightly but after London markets open it is possible that oil prices go up further. For WTI it may touch $105 in the short term," he said.
Earlier Monday, a monthly gauge of China's manufacturing activity showed a drop to 48.5 in February from January's final reading of 49.5, indicating slower manufacturing growth that some market participants attributed to the Lunar New Year holidays.
Weaker manufacturing in China, the world's second-largest oil consumer, is indicative of oil demand trends and usage of fuels like diesel.
Oil markets have been supported by strong winter-driven demand in the U.S. and production outages in Libya, but were expected to ease in the second quarter as seasonal consumption eases.
However, geopolitical risk premium from the Ukraine crisis will mean oil prices remain supported for the short-term.
Barclays said Japan's record-breaking snow storm may also cause spikes in fuel oil and crude oil burning by utilities, and "dips in prompt month Brent are likely to be met with active consumer hedging interest."
Nymex reformulated gasoline blendstock for April--the benchmark gasoline contract--rose 368 points to $3.0142 a gallon, while April heating oil traded at $3.0548, 385 points higher.
ICE gasoil for March changed hands at $932.25 a metric ton, up $11.50 from Friday's settlement.
