Oil prices firm as traders eye Ukraine

Global oil prices edged higher Tuesday as investors kept a close eye on simmering international tensions over Crimea and awaited the outcome of a Federal Reserve monetary policy meeting. New York's main contract, West Texas Intermediate for delivery in April, gained just four cents to $98.12 a barrel compared with Monday's close. Brent North Sea crude for May delivery added 11 cents to stand at $106.35 in early afternoon London trade. Crude futures had fallen on Monday as markets downplayed fears of disruptions to Western European energy supplies after Crimea voted in a disputed referendum to leave Ukraine and join Russia. After Sunday's referendum -- slammed as a sham by the White House and the European Union -- Brussels and Washington issued sanctions on Russian President Vladimir Putin's inner circle on Monday. "Brent crude dropped sharply over trading yesterday, as sanctions against Russia from the EU appeared weak, and there were no commodity based elements to the sanctions," said Inenco analyst Joe Conlan. "This reduced the risk of any loss of supply from Russia and as the risk premium evaporated prices fell continuing the bearish trend of the last week." Western governments said they would freeze assets of key Russian presidential aides and lawmakers and target Crimean "separatist" leaders as well as ousted former Ukrainian president Viktor Yanukovych. Crimea's separatist authorities meanwhile moved against energy companies in their first nationalisations after deciding all Ukrainian state property would be transferred into Crimean ownership. "The current pulse of the market suggests a consensus view that oil and gas will continue to flow, even directly through Ukraine," said Tim Evans of Citi Futures. He added that Libyan oil production had dropped again as the country struggles with rebels blockading eastern oil terminals since July, cutting exports from 1.5 million barrels a day to a trickle of 250,000. On Monday, US Navy SEALs captured an oil tanker that had loaded crude at a rebel-held port in eastern Libya and escaped to sea, at the request of both Libya and Cyprus. The naval commandos were taking it to a Libya port, the US Defense Department said, without identifying the destination. "Libya is still presenting problems to the global market ... as oil production in the country has dropped to just 250,000 barrels per day,” added Conlan at Inenco. Elsewhere, traders were awaiting the outcome of the Federal Reserve's two-day policy meeting on Wednesday. The US central bank is expected to further cut its massive stimulus program amid a slowly recovering economy, the world's largest crude-oil consumer.