LONDON: Brent oil rose to $106 a barrel on Wednesday, supported by an unexpectedly large fall in US gasoline stocks and worries about prolonged supply weakness from Libya as the peak northern hemisphere winter heating season looms.
Brent crude gained 60 cents to $105.93 a barrel by 1543 GMT after touching the day's high of $106.41. US oil rose $1.38 to $94.75.
Data from the Energy Information Administration (EIA) showed US gasoline stocks had fallen by 3.8 million barrels last week, compared with forecasts in a Reuters poll for a 300,000 barrel decline.
As for crude, EIA data showed an increase of 1.58 million barrels, slightly less than the forecast for 1.6 million, which tempered concerns about growing stockpiles, after increases in recent weeks.
Analysts said the overall picture was still negative for oil, citing weak demand, particularly in Europe.
"I would attribute (the market's rise) to a countermove after heavy losses in the previous day," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.
LIBYAN TURMOIL
Turmoil in Libya continued to worry oil investors. Protesters at the Mellitah terminal in western Libya are pressuring Italian co-owner Eni to halt gas exports to Italy, Eni Chief Executive Paolo Scaroni told Italian radio on Wednesday.
The minority Amazigh group, or Berbers, have been inside the port for more than a week, demanding more political rights.
Strikes and armed protests have shut much of the OPEC member's oil output for months.
Continued progress in talks between Iran and the West over Tehran's nuclear programme was reducing some of the risk premium in the market, helping cap gains.
Iran's top negotiator said that a framework deal on its nuclear programme was possible as early as this week.
Iran resumes negotiations in Geneva with six world powers on Thursday to try to end a stand-off over its programme, which the West suspects may be aimed at developing nuclear weapons, despite Iran's denials.
Gains were also capped after a report from the Institute for Supply Management showed that US service-sector activity had picked up, spurring speculation that the Federal Reserve might begin to scale back monetary stimulus later this year.
A roll-back would boost the dollar, making dollar-denominated assets such as oil more expensive for holders of other currencies.
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