Brent Rises on Ukraine Clashes, Libya Uncertainty
Brent crude rose towards $108 per barrel on Tuesday, supported by clashes across Ukraine and lingering uncertainty over Libya's supply recovery.
Pro-Russia rebels shot down a Ukrainian helicopter in fierce fighting near the eastern town of Slaviansk, while Kiev moved police special forces to the port city of Odessa to stop the rebellion spreading westward.
And in Libya, the vital southern El Sharara oilfield remains closed while new protests shut the Zultun and Raquba oilfields in the central eastern region of the OPEC producer. Oil output totals just 250,000 barrels per day, compared to around 1.4 million bpd until mid-2013.
"This shows once again just how difficult and stony the path towards normalising oil production in Libya really is," said Carsten Fritsch of Commerzbank.
Brent crude was up 18 cents at $107.85 per barrel at 1306 GMT, off an intraday high of $108.21. U.S. oil was up 43 cents at $99.91.
Investors were also keeping an eye on unfolding events in Ukraine.
"Although the Ukrainian situation has deteriorated over the last week or so ... the likelihood of crude oil flow from Russia being interrupted due to sanctions is still a low probability," said Dominick Chirichella of Energy Management Institute.
"As such, global supplies are not declining at the moment, and in fact with the growing glut in the U.S. they are actually expanding."
Rising U.S. Stocks
Oil's gains are being capped by plentiful supplies in top consumer the United States, with commercial crude inventories forecast to have hit a record high for a third straight week due to higher imports.
The American Petroleum Institute (API), an industry group, is due to issue its weekly inventory report at 2030 GMT, while the U.S. Department of Energy's Energy Information Administration (EIA) will issue its report on Wednesday.
A preliminary Reuters poll of five analysts, taken ahead of the reports, showed expectations centring around a rise of 1.5 million barrels in crude oil stocks for the week ended May 2.
EIA data wiped off nearly 2 percent from U.S. oil futures over two days last week by showing U.S. crude stocks hit a record high in the week to April 25, led by another steep increase on the Gulf Coast.
However, in Cushing, Oklahoma, the delivery point of WTI crude, stocks have dropped in the last three weeks, as new infrastructure relieves recent bottlenecks at the key oil hub.
"A 1.5 million barrel draw per week could put Cushing two-three weeks away from reaching tank bottoms," Morgan Stanley (MS) said in a research note.
(Additional reporting By Jacob Gronholt-Pedersen in Singapore; editing by Susan Thomas and Keiron Henderson)