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 Ukrainian government forces and separatist pro-Russian militia
staged rival shows of force in eastern Ukraine on the eve of crucial
talks on the former Soviet state's future.
Brent crude has been buoyed by the tensions between Kiev and
pro-Russian separatists in the east of the country in recent days.
The Ukrainian government confirmed on Wednesday that six of its
armored vehicles were in the hands of Russian supporters.
Meanwhile, growing oil stockpiles in the United States have weighed
on benchmark prices there, as production hit the highest level in
more than a quarter of a century, and imports continued to rise.
Brent crude for June delivery rose by a dollar earlier in the
session but pared gains to settle up 24 cents at $109.60 a barrel,
its highest level since March 3. The May contract expired on
Tuesday.
U.S. crude for May delivery rose 1 cent to settle at $103.76 a
barrel. U.S. oil was up more than $1 before the EIA inventory
report. Wednesday marked the U.S. oil options expiry for the May
contract.
"With the long weekend coming and with tensions in Ukraine, there is
a fear to sell U.S. crude, even though the inventory build was so
high," said Bill Baruch, senior market strategist at iitrader.com
LLC in Chicago.
Crude oil stocks rose 10 million barrels to 394 million barrels in
the week ending April 11, according to the Energy Information
Administration (EIA), far more than the 2.3 million-barrel build
expected by analysts. Inventories were boosted in part by a 5.2
million-barrel build on the Gulf Coast, to the highest level since
the EIA began collecting data in 1990.
Brent's premium to U.S. West Texas Intermediate <CL-LCO1=R> crude
grew on Wednesday to the widest level since March 26.
"For Brent/WTI, there is a growing realization that the United
States is not short of crude," said Harry Tchilinguirian, head of
commodity markets strategy at BNP Paribas.
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LIBYA LOADINGS
Growing skepticism that Libyan exports can resume quickly or
sustainably has also supported Brent
A tanker started loading at Libya's eastern port of Hariga on
Wednesday for the first time in nearly nine months, after a
federalist group agreed to reopen the port last week.
But the larger terminals of Ras Lanuf and Es Sider remain in rebel
hands and their fate is subject to further negotiations with the
government of the OPEC exporter.
Fresh evidence of slowing economic growth in China, the world's
second-largest economy and oil consumer, had put pressure on oil
prices early in the day though the data was stronger than many had
expected.
China said its gross domestic product grew by 7.4 percent in the
first quarter, the slowest pace in 18 months but slightly ahead of
market forecasts of a 7.3 percent rise.
"It's not necessarily a negative for oil, but it's not providing the
support that was anticipated," said Michael McCarthy, chief
strategist at CMC Markets in Sydney.
A slowing economy dampened energy use in China as its implied oil
demand fell 0.6 percent to 9.96 million barrels per day in the first
quarter, forcing refiners to scale back crude runs and raise exports
to trim high fuel stocks.
(Reporting by Edward McAllister in Los Angeles, Robert Gibbons in
New York, Lin Noueihad in London; additional reporting by Florence
Tan; editing by William Hardy, Dale Hudson, Paul Simao and Lisa
Shumaker)
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