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 Fresh unrest in eastern Ukraine provided background support for
Brent as traders worried that heightened tensions between Moscow and
the Western powers might interrupt oil supply from Russia, one of
the world's top oil exporters.
The U.S. Energy Information Administration said on Tuesday it did
not assume that a disruption of oil supply or demand would result
from the events in Ukraine.
The U.S. dollar fell to near three-week lows against a basket of six
major currencies on Tuesday, which boosted buying of dollar-priced
commodities such as oil.
U.S. commercial crude stocks rose last week by 7.1 million barrels,
much more than expected, according to preliminary data released by
the industry group the American Petroleum Institute. A preliminary
poll by Reuters forecast crude stocks rose by just 1.3 million
barrels.
U.S. crude oil pared gains slightly in post-settlement trade,
falling by 23 cents to $102.31 a barrel in the immediate minutes
after the data was released.
However, traders said they remained bullish as they awaited official
data from the Energy Information Administration to be released
Wednesday at 10:30 a.m. EDT (1430 GMT), that is expected to show
that gasoline stocks and stockpiles at the Cushing, Oklahoma,
delivery point fell.
Technical trading boosted Brent and U.S. crude prices in addition to
the support from fundamentals after both contracts fell to key lows
on Monday, and bounced back in Tuesday's session.
"The seeds to today's prices were sowed yesterday," said Walter
Zimmermann, chief technical analyst at United-ICAP in New Jersey.
"Both U.S. crude and Brent held exactly, to the penny, to a bull
mark correction (level). The reaction to falling to that key level
was (they) ricocheted higher."
U.S. crude rose $2.27 to hit a session high of $102.71 a barrel,
before giving up some gains to settle $2.12 higher at $102.56 a
barrel.
Brent rose $2.03 to a session high of $107.85 a barrel. It settled
$1.85 higher at $107.67 a barrel.
Brent's premium over U.S. crude narrowed 27 cents to $5.11.
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Limiting Brent's gains was the prospect that Libyan oil exports
would rebound. Crude prices fell on Monday after news that rebels
had agreed to gradually end their eight-month blockade of Libyan oil
ports, which account for around 700,000 barrels per day.
However, Libya's National Oil Corp had not yet lifted a force
majeure at the eastern ports on Tuesday.
The Ukraine government said the occupation of government buildings
by pro-Moscow protesters that began on Sunday is part of a
Russian-led plan to dismember the country. U.S. Secretary of State
John Kerry said he feared Moscow might repeat its Crimean operation.
NATO Secretary-General Anders Fogh Rasmussen warned Moscow that if
it encroaches into eastern Ukraine, there would be "grave
consequences" for its relationship with the alliance.
News of an easing of tensions between the West and Iran kept a lid
on global oil prices. Tehran said Monday it hoped for enough
progress this week to enable negotiators to start drafting a final
accord by mid-May to settle a long-running dispute over its nuclear
program.
The Islamic republic and six world powers will hold a new round of
talks in Vienna on Tuesday and Wednesday.
(Additional reporting by Ron Buosso in London;
editing by Jane
Baird, Lisa Von Ahn, Bernadette Baum, Peter Galloway and Jonathan
Oatis)
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