Benchmark West Texas Intermediate crude for May delivery gained $2.12, or 2.1 per cent, to US$102.56 a barrel on the New York Mercantile Exchange, its highest closing price since March 7.
Brent crude, used to set prices for international oil varieties, rose $1.85 to US$107.67 on the ICE Futures exchange in London.
Tensions in Ukraine escalated again Tuesday as security forces ousted pro-Russian protesters from an occupied government building in the eastern city of Kharkiv, while regional administration headquarters in Donetsk remained under the control of protesters. They are demanding referendums on the regions' status, which could pave the way for further annexations by Russia.
"Any further escalation of the situation would intensify tensions between Russia and the West and could lead to tighter sanctions being imposed on Russia," said analysts at Commerzbank in Frankfurt in a note to clients. "So far, the market appears to believe this to be unlikely, though that means the price would react all the more strongly if sanctions actually were imposed on the Russian oil and gas sector."
Meanwhile, the Energy Department slightly lowered its prediction for domestic oil production this year to 8.37 million barrels a day from 8.39 million barrels. U.S. oil production has been surging thanks to improved methods of drilling for oil in shale rock formations. Last year, the U.S. produced 7.44 million barrels of oil a day.
Wednesday, investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products. Data for the week ended April 4 are expected to show a build of 2.5 million barrels in crude oil stocks and a draw of 1.3 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
In other energy futures trading in New York, wholesale gasoline rose five cents to US$2.98 a U.S. gallon (3.79 litres), heating oil added four cents to US$2.93 a gallon and natural gas gained six cents to US$4.53 per 1,000 cubic feet.
(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS), (TSX:CVE)Suggest a correction