Will Obama Push Putin To Pull The Oil Plug

Obama and the European Union have ramped up pressure on Russia over the annexation of Crimea, imposing sanctions on senior figures close to President Vladimir Putin, who retaliated in a deepening of the worst East-West crisis since the Cold War. European Union leaders slapped an asset freeze and travel ban on 12 more Russians and Ukrainians, bringing to 33 the number of figures targeted by the European bloc. The move came on the heels of an announcement by US President Barack Obama of a new round of punitive measures against 20 Russian MPs and senior government officials, in addition to 11 individuals already targeted. Obama, who threatened to target the broader Russian economy if Moscow did not reverse course, said: ‘Russia must know that further escalation will only isolate it further from the international community.’

The 28-nation bloc also cancelled an EU-Russia summit planned for June and called for the dispatch of international or EU monitors to Ukraine. These flashy political games are no more than a press battle as most trades and speculators seeing them as ineffective and more like children throwing tantrums. At some point Mr. Putin is going to pull the plug on the flow of gas and oil to the EU. Just the threat of a stoppage could throw the Eurozone into turmoil sending oil and gas to record highs. The International Monetary Fund said meanwhile it made ‘significant progress’ in talks with Ukraine’s new Western-backed government over the resumption of a vital support program for the crisis-hit state. Standard Poor’s on the other hand revised the outlook on Russia’s credit rating to negative from stable on rising political and geopolitical risks linked to the Ukraine crisis and accompanying Western sanctions. Russia provides about a quarter of Europe’s natural gas supplies, with about 80 percent of those exports traveling through pipelines in Ukraine, analysts say. Traders fear that an escalation of the crisis would disrupt those supplies.

Crude oil traders are completely ignoring to conflict as oil fell almost 60 cents this morning to sell for 98.31 while natural gas tumbled 58 points to trade at 4.317. Winter residential demand continues to ease as the weather began to turn to spring temperatures. Crude oil inventory this week reported much higher than expected, while natural gas in storage fell to 953 Bcf as of Friday, March 14, according to the U.S. Energy Information Administration. A net storage withdrawal of 48 Bcf for the week resulted in storage levels 49.4% below year-ago levels and 47.9% below the 5-year average.

Colder temperatures this winter in the United States led to increased demand for natural gas from the electric power sector, as more natural gas-fired generation was needed to heat homes and businesses. From November 1, 2013, to March 18, 2014, daily temperatures in the 48 contiguous states averaged 41 degrees Fahrenheit, 7% colder than the same period last winter, according to data from Bentek Energy.

U.S. oil price dropped Thursday as the US dollar appreciated against other currencies after the Federal Reserve’s decision to cut its stimulus monetary policy. A stronger greenback makes the dollar-priced crude more expensive and less attractive for buyers holding other currencies. Brent oil eased by 9 points to trade at 106.07