LONDON: Brent crude oil rose on Wednesday, holding above $110 a barrel on renewed optimism about steady demand growth in the United States, the world's top oil consumer, coupled with further disruptions to Libyan supplies.
Orders for long-lasting U.S. manufactured goods unexpectedly rose and consumer confidence perked up, U.S. data showed, underpinning risk assets including oil and powering U.S. equity markets to another record close.
Brent crude gained 23 cents to $110.25 by 1039 GMT after ending 30 cents lower as some profits were booked following a long holiday weekend. U.S. oil gained 20 cents to $104.31 after losing 24 cents in the previous session.
"Brent is continuing to hold its own above the $110 per barrel mark, finding support from positive U.S. economic data and the production outages in Libya, where rebels are preventing the loading of tankers at an oil terminal that only reopened just a month ago," Commerzbank analysts said in a research note.
The overnight U.S. data added to gains in a market already elevated by supply disruptions in Libya and the rift between Russia, the world's top oil producer, and the West over Ukraine.
Ukrainian aircraft and paratroopers killed more than 50 pro-Moscow rebels in an assault that raged into a second day on Tuesday after a newly elected president vowed to crush the revolt in the east once and for all.
In Libya, a brigade from the country's Petroleum Facilities Guard has disrupted operations at Hariga port in the far east of the country to demand salary payments. Full storage tanks at Hariga have forced a production halt at Sarir and a reduction at Messla, oilfields which feed the terminal.
Helping to cap gains in oil are rising exports from Iraq.
Oil exports from its southern terminals are on track for a record high in May, according to loading data and industry sources. Shipments have averaged 2.60 million barrels per day in the first 27 days of May, according to shipping data tracked by Reuters.
SUPPLY OUTLOOK
Any fall triggered by investors booking profits may see Brent declining to $108.50 a barrel if the contract manages to drop past the $110 and $109 levels, Tetsu Emori, a commodity fund manager at Astmax Investment, said.
Similarly, a strong support level for the U.S. benchmark is $101 if it manages to slip below $103, he said.
Investors are also awaiting commercial stockpile data from the United States to gauge the country's demand growth outlook.
U.S. commercial crude oil stocks and refined product inventories were expected to have risen in the week to May 23, a preliminary Reuters poll of five analysts showed.
The survey forecast crude oil stocks to have increased 700,000 barrels last week. The survey is taken ahead of weekly inventory reports from the American Petroleum Institute (API), an industry group, and from the U.S. Department of Energy's Energy Information Administration (EIA).
The API and EIA reports are each coming out a day later than normal because of the U.S. holiday on Monday.
"For now we are stuck in a range," Christopher Bellew, trader at Jefferies Bache, said.
"There are potential drivers coming up: next month's talks on Iran's nuclear programme, developments in Ukraine, Chinese economic data so it will break eventually."
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