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WTI futures were lower during midday trade in Europe today, while Brent was steady. A Malaysian airliner crashed over Ukraine last night, disturbing markets amid fresh sanctions against Russia. Meanwhile, natural gas futures were steady after dropping below $4 on the EIA report yesterday.

West Texas Intermediate futures for settlement in August traded for $103.02 per barrel at 12:45 GMT on the New York Mercantile Exchange, down 0.16%. Prices ranged from $103.94 to $103.00 per barrel. The US contract added 1.97% yesterday, and is up some 2.3% this week.

Meanwhile on the ICE in London, Brent futures due in September stood for a 0.01% drop at $107.88 per barrel. Daily high and low stood at $108.62 and $107.87 per barrel, respectively. Brent’s premium to September WTI stood at $5.73, after last session’s closing margin of $5.69. The European contract gained 0.67% on Thursday, after limited net gains earlier in the week.

Ukraine

A Malaysian airliner, Boeing 777, carrying 298 people, crashed over rebel-controlled territory in eastern Ukraine last night, immediately spurring speculation that it was shot down. The plane was flying at cruise altitude of some 10 kilometers, and no distress signal was emitted.

“In order to bring down an airplane from an altitude of 10,000m, you need to have very serious weapons…. missiles,” Sergei Kovalyov, head of the Russian Air Traffic Controllers’ Union, said for the BBC. “It’s either a mistake or a terrorist act.”

Ukrainian President Petro Poroshenko said it was an “act of terrorism”, while Foreign Minister Pavlo Klimkin told the BBC authorities had intercepted phone conversations that proved the plane was shot down by pro-Russian separatists.

Alexander Borodai, a separatist leader, accused the Ukrainian government of shooting the plane down, and Russian President Vladimir Putin dismissed any liability. “The country in whose airspace this happened bears responsibility for it,” he said.

Earlier, the Ukrainian military had said two of its own warplanes were shot down by the militants, one of which is said to have also been at relatively high altitude of 6-7 km. Authorities say the insurgents are now equipped with modern and powerful weaponry supplied by Russia.

The Kremlin has denied any involvement with the conflict and the separatists. During the Crimean crisis, Russian President also denied Moscow’s involvement, only to later admit that it was Russian soldiers who took over the peninsula.

Sanctions

The US and EU stepped up sanctions against Russia earlier this week, as Moscow’s efforts to deescalate tensions in Ukraine are seen as insufficient. In addition to expanding the list of individuals, the US also targeted Gazprombank, the Russian gas giant’s bank, Rosneft and the Kalashnikov concern, limiting their access to US capital markets.

“The Russian leadership will see once again that its actions in Ukraine have consequences,” US President Obama said. “Ukrainians deserve to forge their own destiny”.

The EU also added that the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) would stop financing projects in Russia. The EIB alone has provided more than €1.6 billion for Russian ventures since 2003.

Natural gas

Front month natural gas futures, due in August, were down 0.08% at the New York Mercantile Exchange to trade for $3.951 per million British thermal units at 12:41 GMT today. Prices ranged from $3.976 to $3.947 per mBtu. The contract slumped by 4.01% yesterday, reaching an eight-month low of $3.936 per mBtu, erasing minor gains from earlier this week.

“In light of the very large builds in gas storage, including today’s, we’re seeing the possibility of a further deterioration in prices,” Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York, said for Bloomberg after the EIA report. “This is the traditional peak of summer heat, and it’s just not materializing.”

The US Energy Information Administration (EIA) posted its weekly natural gas storage report yesterday, revealing 107 billion cubic feet (Bcf) were added to stockpiles, beating estimates of a 95-103 Bcf injection. Storage levels narrowed to gap to last year’s level to 22.2%.

NatGasWeather.com reported on Friday that the cold blast from Canada has pushed deep into the southern US, cooling a significant portion of the country. However, the systems has now weakened and will allow for a rise in temperatures in the next few days. Another cool system over the South Plains will also impact readings, though only slightly. The extreme southern and the western US remain in the grips of strong and resilient high pressure, supporting the moderately high temperatures. Cooling demand over the next seven days will probably be low-to-moderate.

In the 8-14 day outlook, NatGasWeather.com projected a neutral trend for the US. Higher pressure will be returning to the northeastern half of the US. However, more blasts will be pushing southwards into the Northeast and Midwest later in the period, probably lowering temps again.

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