LONDON: Brent crude rose towards $104 a barrel on Wednesday after South Korea's sweetened incentives for non-Middle East crude oil imports heightened demand prospects, and fuel stockpiles in the United States declined sharply.
Investors are also watching the dollar, wary of any disappointment in upcoming US job reports. Swings in the US currency have roiled commodity prices, as investors see-saw on the chances of the Federal Reserve rolling back its monetary stimulus.
Brent crude edged up 47 cents to $103.71 a barrel by 0915 GMT. US oil rose 56 cents to $93.87.
South Korea's move to cut its reliance on Middle East suppliers and make imports of crude from other regions more attractive is expected to increase demand for crudes priced off Brent.
"It should also make it easier for South Korean refiners to test and import other light grades than just Forties from the Atlantic Basin (eg North and West African crude oils)," said Swiss-based energy analyst Olivier Jakob of Petromatrix.
Prices were also supported by data from the American Petroleum Institute that showed a surprise 7.8-million-barrel drop in crude stocks in the world's top oil consumer, versus forecasts for a decline of 400,000 barrels.
Market participants are now awaiting oil inventory figures from the Energy Information Administration (EIA), generally considered more reliable, to gauge the demand outlook for the world's biggest economy.
Investors will also be watching a report by US payrolls processor ADP, due later on Wednesday, for clues on Friday's labour report. Weekly jobless claims have been in focus as investors try to second guess US monetary policy.
"These economic indicators have gained a lot of importance of late, and most markets, including oil, are looking at these numbers more than they were before," said Ben Le Brun, an analyst at OptionsXpress in Sydney.
"Overall, oil markets will remain largely choppy as investors try and gauge if stimulus measures from the US Fed will continue or not."
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