Oil rises as China, Iran outweigh US stockbuild

- Brent crude rose on Wednesday as upbeat Chinese manufacturing data and concerns about the standoff between Iran and the West outweighed data showing a large build in US oil inventories. US crude turned negative after data from the US Energy Information Administration showed inventories shot up 4 million barrels last week, including a steep 1.5 million barrel increase at the Cushing, Oklahoma delivery point for the New York Mercantile Exchange's oil futures contract.
Brent also pared gains after the data was released, but remained in positive territory on hopes that Greece appeared closer to clinching a debt-swap deal with its private creditors.
In London, Brent crude for March delivery was up 36 cents at $111.34 a barrel, by 1:50 pm (1850 GMT), having hit an early high of $112.82. US crude had fallen 63 cents to $97.85.
In addition to higher stockpiles, US crude was hampered by data showing a slower pace of job creation in the private sector, although manufacturing growth picked up in January.
The EIA data also showed a strong 3 million barrel gain in US gasoline stockpiles as demand continued to slump and stood at levels last seen 11 years ago.
US March RBOB gasoline futures sharply pared early gains, rising 0.28 cent at $2.8937 a gallon in afternoon activity, off an early high of $2.9487. US RBOB gasoline is taking a hit from the EIA data and is pulling crude futures lower," said Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania.
Early support for crude came from data showing China's factory sector expanded slightly in January, defying expectations for a contraction and supporting hopes that the world's largest energy consumer will continue to beef up oil demand as it avoids a hard landing.
Traders were also eyeing US efforts to further tighten its already harsh sanctions against Iran for its disputed nuclear program as US lawmakers are considering more measures to constrict Tehran's oil revenues.
The measures would single out Iran's national oil and shipping companies and restrict its ability to tap into electronic banking services.