RTTN:Crude Oil Soars To End Near $105 As Ukraine Crisis Deepens
U.S. crude oil moved up sharply to end at a five-month high on Monday, amid escalating tensions in the Ukraine, where Russian forces seem to have taken over the strategically important Crimea region. Some encouraging economic reports also supported oil prices, but the real focus was the geopolitical tensions in Ukraine with Russian crude oil and natural gas a big factor. . Russian President Vladimir Putin insists he has the right to invade his southern neighbor in the interest of Russian citizens living in the Ukraine. Investors were deeply concerned about supply interruptions and sanctions against Russia, one of the world's largest producers of crude oil and natural gas.
The Ukraine Prime Minister said the Russian actions tantamount to "a declaration of war." The G7 leaders have also condemned Russia's intervention, while U.S. Secretary of State John Kerry will travel to Kiev Tuesday to offer help for Ukraine. The stage is set for a return to the Cold War years, with news that the U.S. is readying for some tough sanctions against Russia.
Light Sweet Crude Oil futures for April delivery, the most actively traded contract, gained $2.33 or 2.3 percent to close at $104.92 a barrel on the New York Mercantile Exchange Monday.
Crude prices for April delivery scaled a high of $105.22 a barrel intraday and a low of $102.95.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.08 on Monday, up from its previous close of 79.78 late Friday in North American trade. The dollar scaled a high of 80.10 intraday and a low of 79.77.
The euro traded lower against the dollar at $1.3734 on Monday, as compared to its previous close of $1.3760 late Friday in North America. The euro scaled a high of $1.3793 intraday and a low of $1.3732.
In economic news, a report from the Institute for Supply Management on Monday showed activity in the U.S. manufacturing sector expanded at a faster than expected in February, notwithstanding the impact of adverse weather conditions. The ISM purchasing managers index climbed to 53.2 in February from 51.3 in January, with a reading above 50 indicating growth. Economists expected the index to edge up to 51.9.
Meanwhile, construction spending in the U.S. unexpectedly showed a modest increase in January, a report from the Commerce Department revealed Monday. The construction spending edged up 0.1 percent to a seasonally adjusted annual rate of $943.1 billion in January from the revised December estimate of $941.9 billion. Economists expected spending to drop by about 0.5 percent.
Separately, a report from the Commerce Department on Monday showed personal income and spending in the U.S. to have risen more than expected in January, Personal income rose by 0.3 percent in January after edging down less than a tenth of a percent in December. Economists expected income to increase by about 0.2 percent. Meanwhile, personal spending increased by 0.4 percent in January following a downwardly revised 0.1 percent increase in December. Economists expected spending to inch up 0.1 percent compared to the 0.4 percent increase originally reported for the previous month.
An indicator of performance by the Chinese manufacturing sector dropped for a seventh successive month in February amid faltering demand both at home and abroad, adding to concerns that economy is facing downside risks from weak industrial activity. The Markit/ HSBC manufacturing purchasing managers' index, or PMI, dropped to 48.5 in February from 49.5 in January. A reading below 50 indicate decline in activity. The flash estimate was 48.3.
