Brent crude oil fell on Thursday after the United States, Russia, Ukraine and the European Union joined to call for an end to the violence in Ukraine, taking some risk premium out of the market, while US oil rose on positive economic data. The joint statement from the four parties meeting in Geneva sought an immediate halt to violence in Ukraine, where Western powers believe Russia is fomenting a pro-Russian separatist movement.
Brent crude for June delivery, which has received support in recent days as violence in Ukraine has escalated, was down 35 cents at $109.22 a barrel at 12:56 pm EDT (1656 GMT), after earlier hitting a high of $110.19 ahead of the joint statement on Ukraine. Brent hit $110.36 in intraday trade on Wednesday, the highest since March 4. While the United States and European Union have stopped short of imposing sanctions on Russia's oil and gas exports, tensions between them and the world's second-largest crude exporter have put energy markets on edge.
"The rhetoric about the Ukraine has been ratcheted down and that fear play in oil markets is coming down with it," said Phil Flynn, analyst at Price Futures Group in Chicago. "Instead, today we are talking about economic data." US prices found support from strong US employment data, which showed new applications for unemployment benefits close to a 6-1/2 year low, the latest sign the economy of the world's largest oil consumer is gaining momentum.
US oil for delivery in May rose 21 cents to $103.97 a barrel, after earlier hitting a high of $104.78 a barrel. The contract had touched a six-week high of $104.99 in the previous session, though a report showing a large build in stockpiles had weighed on sentiment on Wednesday.
With Russian troops massed on the border with Ukraine and three separatists killed overnight in eastern Ukraine, the prospects of defusing the crisis at the Geneva talks had appeared slim, which boosted oil prices. Russian President Vladimir Putin accused Ukraine's leaders on Thursday of committing a "grave crime" by using the army to try to quell unrest in the east of the country and did not rule out sending in Russian troops.
But addressing Russians in his annual televised phone-in, Putin said he hoped he would not need to take such a step and that diplomacy could succeed in resolving the stand-off. A softer dollar had earlier supported gains in dollar-priced commodities after US Federal Reserve Chair Janet Yellen stressed the need for accommodative monetary policy, citing persistently low inflation and economic slack.
US oil prices rose despite a sharp spike in crude stockpiles in the United States last week as traders focused on falling supplies at the benchmark contract's delivery point in Cushing, Oklahoma. Crude oil stocks nationally climbed 10 million barrels to 394 million barrels in the week ended April 11, according to the US Energy Information Administration (EIA), but fell at Cushing by 770,000 barrels to the lowest level since 2009.
New pipeline infrastructure increasing Cushing's connection to the Gulf Coast refining centre had drained stocks by 36 percent since late January to 26.8 million barrels, narrowing US crude's discount to Brent. US crude for June delivery was trading $6.19 below Brent on Thursday.