LONDON: Oil rose to $110 a barrel on Wednesday, supported by an unexpected decline in U.S. crude inventories last week and by persistent disruption to Libya's output amid renewed fighting.
The U.S. Energy Information Administration report, released at 1430 GMT, said that crude stocks fell 7.2 million barrels. That compared with an analyst forecast for an 800,000 barrel increase.
Crude initially pared gains after the report as the drop was not as large as the 10.3 million-barrel decline reported by industry group the American Petroleum Institute on Tuesday.
"Everybody saw the API numbers last night and took their positions overnight and into this morning," said Carl Larry of consultancy Oil Outlooks.
"The number today was not as big as the API number, but we had a good idea that it was going to be close. People got in overnight, made some good money on the rally overnight."
Brent crude was up 42 cents to $110.11 a barrel at 1458 GMT, after settling 32 cents higher in the previous session. U.S. crude rose $1.09 to $103.42, after it settled 22 cents up.
Libya provided support for oil prices generally and for Brent in particular, as most Libyan oil is priced in relation to the dated Brent benchmark.
Explosions and fighting were heard near two military camps in Tripoli on Wednesday, witnesses said, two days after gunmen had stormed parliament in the worst violence in months.
"Developments in Libya and Ukraine are still keeping an elevated risk premium in Brent, with some jittery trading ahead," said Andrey Kryuchenkov, an analyst at VTB Capital.
National output in Libya was 230,000 barrels per day (bpd), up from 210,000 bpd on Monday but still a fraction of Libya's potential. Two large oilfields were still shut more than a week after the government said protests there were over.
Libya, an OPEC member, produced close to 1.6 million bpd before the 2011 war, which toppled Muammar Gaddafi.
The conflict in Ukraine also supported prices. A senior Russian official said the presidential election in Ukraine on May 25 could deepen political divisions, casting doubts on whether Moscow will consider the vote legitimate.
The West has imposed sanctions against Russia, one of the world's biggest oil producers, over its involvement in the conflict in Ukraine. A dispute between Moscow and Kiev over gas prices could impact shipments of Russian natural gas to Europe.
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